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Reauthorizing the Satellite Home Viewing
Provisions in the Communications Act and
the Copyright Act: Issues for Congress
Charles B. Goldfarb
Specialist in Telecommunications Policy
June 5, 2009
Congressional Research Service
7-5700
www.crs.gov
R40624
CRS Report for Congress
P
repared for Members and Committees of Congress
c11173008
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Reauthorizing the Satellite Home Viewing Provisions
Summary
Key copyright and retransmission provisions in the 2004 Satellite Home Viewer Extension and
Reauthorization Act (SHVERA) face reauthorization this year; they expire on December 31, 2009
and satellite operators would no longer be allowed to provide their subscribers the signals of any
broadcast stations located outside their subscribers’ local markets.
Congress has constructed a regulatory framework for the retransmission of broadcast television
signals by satellite television operators with the goal of fostering satellite as a competitor to cable
service. Today, the regulatory framework for satellite exists alongside an analogous, but in some
significant ways different, regulatory framework for cable. These frameworks attempt to balance
a number of longstanding, but potentially conflicting, public policy goals – most notably,
localism, competitive provision of video services, support for the creative process, and
preservation of free over-the-air broadcast television. They also attempt to balance the interests of
the satellite, cable, and broadcast industries. The statutory provisions distinguish between the
retransmission of local signals – the broadcast signals of stations located in the same local market
as the subscriber – and of distant signals. Provisions block or restrict the retransmission of distant
broadcast signals in order to protect the local broadcasters from competition from distant signals
and to provide them with a stronger negotiating position vis-à-vis the satellite and cable
operators, with the intention of fostering local programming.
In addition to the specific provisions subject to sunset, there are several policy issues currently
under debate. These include:
• In many situations, counties in one state are assigned to a local market for which
the primary city (and the local broadcast stations) are in another state. Under
current rules, satellite and cable companies are prohibited or restricted from
providing to subscribers in these “orphan counties” the signals of in-state
stations. There have been a number of proposals to modify existing statutes to
allow or encourage the provision of in-state signals.
• Currently, satellite operators are allowed, but not required, to offer subscribers
the signals of all the broadcast stations in their local market. DirecTV and
DishTV have chosen not to offer such “local-into-local” service in small markets
representing about 3% of U.S. television households. They argue that it would
cost more to provide such service than they could recover in revenues and that
their limited capacity could be better used providing high definition and other
service in more densely populated areas. Representative Stupak has introduced
H.R. 927, which would require satellite operators to offer local-into-local service
in all markets.
• A number of statutory provisions, and many Federal Communications
Commission and Copyright Office rules adopted to implement statutory
provisions, are based on the transmission of analog broadcast signals, but during
2009 the required transition to digital broadcast signals will largely be achieved.
As a result, some of the existing statutes and rules may no longer be effective in
attaining the objectives for which they were enacted, unless they are modified.
This report will be updated as warranted.
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Contents
Overview .................................................................................................................................... 1
Introduction .......................................................................................................................... 1
Issues in the Current Public Policy Debate ............................................................................ 3
Differences in the Current Retransmission and Copyright Rules for Satellite and Cable ............... 9
Providing the Signals of Non-Local but In-State Stations to Orphan Counties............................ 12
Tables
Table 1. Current Retransmission and Copyright Rules for Satellite and Cable Operators............ 10
Contacts
Author Contact Information ...................................................................................................... 18
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Overview
Introduction
Congress has constructed a regulatory framework for the retransmission of broadcast television
signals by satellite television operators through a series of laws – the 1988 Satellite Home Viewer
Act (SHVA),1 the Satellite Home Viewer Act of 1994,2 the 1999 Satellite Home Viewer
Improvement Act (SHVIA),3 and the 2004 Satellite Home Viewer Extension and Reauthorization
Act (SHVERA).4 These laws have fostered satellite provision of multichannel video
programming distribution (MVPD) service and, as satellite has become a viable competitor to
cable television, attempted to make the regulatory regimes for satellite and cable more similar.
Today, the regulatory framework for satellite exists alongside an analogous, but in some
significant ways different, regulatory framework for cable.
The various provisions in these satellite acts created or modified sections in the Communications
Act of 19345 and the Copyright Act.6 The relevant sections in the Communications Act are
administered by the Federal Communications Commission (FCC) and those in the Copyright Act
are administered by the Copyright Office in the Library of Congress
SHVERA includes several provisions that will expire on December 31, 2009, unless they are
reauthorized. Most significantly,
• Section 119 of the Copyright Act7 allows satellite operators to retransmit certain
“distant” (non-local) broadcast television signals to their subscribers and
provides those operators with an efficient, relatively low cost way to license
copyrighted works contained in those broadcast signals – a per subscriber, per
signal, per month royalty fee. If the law expired, satellite operators would no
longer be allowed to offer their subscribers the signals of “superstations”8 or to
offer broadcast network programming to that subset of subscribers who currently
cannot receive the signals of local broadcast television network affiliates (that is,
local ABC, CBS, NBC, and Fox affiliates).9 In addition, Section 119 allows
1 P.L. 100-667.
2 P.L. 103-369.
3 P.L. 106-113.
4 P.L. 108-447, passed as Division J of Title IX of the FY2005 Consolidated Appropriations Act.
5 47 U.S.C. §§ 325, 335, 338, 339, 340, and 341.
6 17 U.S.C. §§ 111, 119, and 122.
7 17 U.S.C. §119.
8 Superstations are independent broadcast television stations whose broadcast signals are picked up and redistributed by
satellite to local cable television operators and to satellite television operators all across the United States. These
superstations in effect function like a cable network rather than a local broadcast television station or a broadcast
television network. There are six superstations: WTBS, Atlanta; WOR and WPIX, New York; WSBK, Boston; WGN,
Chicago; KTLA, Los Angeles; and KTVT, Dallas. All of these superstations carry the games of professional sports
teams.
9 The specific household eligibility requirements for receiving distant signals are very complex, and include certain
grandfathered exceptions, but as a general rule households that can receive the signals of local broadcast television
stations either over-the-air or as part of local-into-local satellite service are not eligible to receive distant network
signals.
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satellite providers to retransmit to their subscribers, under a royalty-free
copyright license, the signals of stations that are located outside the local market
in which the subscriber is located but that are “significantly viewed” by those
households in the local market that do not subscribe to any MVPD provider.10 If
section 119 expired, satellite operators would no longer be allowed to offer their
subscribers the signals of significantly viewed stations.
• Section 325(b)(2)(C) of the Communications Act11 allows a satellite operator to
retransmit the signals of distant network stations, without first obtaining the
retransmission consent of those distant stations, to those subscribing households
who cannot receive the signals of local broadcast television network affiliates.12
If it expired, a satellite operator would have to negotiate compensation terms
with those distant network stations whose signals it retransmitted to those
“unserved” subscribers.
The satellite and cable regulatory frameworks attempt to balance a number of longstanding, but
potentially conflicting, public policy goals – most notably, localism, competitive provision of
video services, support for the creative process, and preservation of free over-the-air broadcast
television. They also attempt to balance the interests of the satellite, cable, and broadcast
industries. Congress incorporated the sunset provisions in SHVERA because of its concern that
market changes could affect these balances.
The statutory provisions distinguish between the retransmission of local signals – the broadcast
signals of stations located in the same local market as the subscriber – and of distant signals.
Provisions block or restrict the retransmission of distant broadcast signals in order to protect the
local broadcasters from competition from distant signals and to provide them with a stronger
negotiating position vis-à-vis the satellite and cable operators, with the intention of fostering local
programming.
The regulatory framework for satellite sets the parameters within which industry players must
conduct business. It provides answers to three fundamental business questions:
• may – or must – the satellite operator retransmit certain categories of local or
distant broadcast signals?13 If so,
• is retransmission of those signals contingent on the satellite operator receiving
the prior retransmission consent of – and providing compensation to – the
broadcaster? and
10 The specific threshold viewing level for a “significantly viewed” station are, for a network affiliate station, a market
share of at least 3% of total weekly viewing hours in the market and a net weekly circulation of 25%; for independent
stations, 2% of total weekly viewing hours and a net weekly circulation of 5%. The share of viewing hours refers to the
total hours that households that do not receive television signals from MVPDs viewed the subject station during the
week, expressed as a percentage of the total hours these households viewed all stations during the week. Net weekly
circulation refers to the number of households that do not receive television signals from MVPDs that viewed the
station for 5 minutes or more during the entire week, expressed as a percentage of the total households that do not
receive television signals from MVPDs in the survey area. A satellite operator can retransmit the signals of these
significantly viewed stations only with the retransmission permission of the station.
11 47 U.S.C. § 325(b)(2)(C).
12 See footnote 9.
13 This is formally referred to in the statute as “secondary transmission” of the broadcast signals. The initial
transmission of the signals by the broadcast station is the “primary transmission.”
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• is retransmission of those signals subject to specific copyright license terms?
Industry players also must conduct business within the context of the long-standing industry
practice of broadcast program suppliers – both broadcast networks and owners of non-network,
syndicated programming – contractually granting individual broadcast television stations the
exclusive broadcast rights to that programming in a geographic area and restricting those
broadcast stations from allowing other parties to retransmit the station signals carrying that
programming beyond the area of exclusivity. Thus, in some situations where the regulatory
framework allows satellite (or cable) operators to retransmit the signals of a distant (non-local)
broadcast station, subject to obtaining the permission of the broadcast station, that station may be
– and, in practice, often is – contractually prohibited from granting the MVPD retransmission
rights.
Issues in the Current Public Policy Debate
The current policy debate is motivated by, but not limited to, the potential need to address
the statutory copyright and retransmission consent provisions that will expire on
December 31, 2009. To date, two policy issues are receiving the most attention.
• Carriage of Adjacent In-State, But Non-Local, Broadcast Signals: Under
current statutes and rules, a number of counties are assigned to local markets for
which the principal city (from which all or most of the local television signals
originate) is outside their state. As a result, satellite subscribers (and many cable
subscribers) in these “orphan counties” are not receiving signals from in-state
broadcast stations and may not be receiving news, sports, and public affairs
programming of interest in their state. Some observers therefore have proposed
that satellite operators be allowed to retransmit (and cable operators encouraged
to retransmit) to their subscribers in these counties the signals of broadcast
stations in in-state, but non-local, markets. Broadcasters, however, have voiced
concern that allowing such retransmission could undermine their financial
viability by reducing their audience share and thus reducing their advertising
revenues. They also assert such retransmission would weaken the local
broadcasters’ negotiating position with the satellite and cable operators, who
could turn to the programming of an in-state but out-of-market affiliate of a
particular network if they failed to reach retransmission consent with the local
affiliate of that network. Broadcasters claim this would harm their ability to
provide quality local programming, which is expensive to produce.14
Representative Ross has announced his intention to introduce a bill that would
allow multi-channel video programming distributors (MVPDs) – satellite
operators and cable operators (including telephone companies) – located in an
orphan county to retransmit the signals of television broadcast stations located in
an adjacent in-state market.15 In addition, the Four Corners Television Access Act
14 See, for example, John Eggerton, “Affiliate Associations Warn Legislators Against Allowing Imported Signals from
In-State, Distant Markets,” Broadcasting & Cable, March 30, 2009. The issues relating to MVPD retransmission of
non-local in-state broadcast signals to orphan counties are discussed in greater detail in a later section of this report.
15 Opening statement of Rep. Ross, Hearing on Reauthorization of Satellite Home Viewer Extension and
Reauthorization Act, Subcommittee on Telecommunications and the Internet of the House Committee on Energy and
Commerce, February 24, 2009. See, also, Anne Veigle, “Ross Seeks Co-Sponsors for Distant TV Signals Bill,”
Communications Daily, May 22, 2009.
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of 2009 has been introduced in both the House (H.R. 1860, by Representatives
Salazar and Coffman) and the Senate (S. 771, by Senators Bennet and Udall) to
allow satellite operators to retransmit the signals of certain in-state broadcast
stations to subscribers located in two Colorado counties that are assigned to the
Albuquerque, NM local market and to allow cable operators located in those
counties to retransmit the signals of certain in-state stations without having to
obtain retransmission consent from the stations.16
• Discretionary vs. Mandatory Local Carriage: Currently, satellite operators are
allowed, but not required, to offer subscribers the signals of all the broadcast
stations in their local market. If a satellite operator chooses to retransmit the
signal of a local broadcast station, it must retransmit the primary signals of all the
stations in that local market, subject to obtaining local station permission. The
satellite operators have chosen not to offer this “local-into-local” service in many
small markets, preferring to use their satellite capacity to provide additional high
definition and other programming to larger, more lucrative markets than to use
the capacity to serve very small numbers of customers. In some cases, those
small markets may not generate enough revenues to cover the costs of providing
local-into-local service.17 As a result approximately 3% of all U.S. households do
not have access to local broadcast signals if they subscribe to satellite video
service.18 Representative Stupak has introduced H.R. 927, which would require
satellite operators to offer local-into-local service in all markets.
In the debate about reauthorization of the sunsetting provisions in SHVERA, a number of other
policy issues are likely to be raised and may be addressed in legislation.
• Revising Existing Rules That Are Based on Analog Technology: A number of
statutory provisions, and many FCC and Copyright Office rules adopted to
implement statutory provisions, are based on the transmission of analog
broadcast signals, but during 2009 the transition to digital broadcast signals will
largely be achieved. As a result, statutes and rules that explicitly refer to analog
technology may no longer be effective in attaining the objectives for which they
were initially enacted, unless they are modified. A number of parties have stated
that it is timely to make such modifications. Marybeth Peters, Register of
Copyrights, has proposed five modifications to Section 111 of the Copyright Law
16 Also, Rep. Boren has introduced H.R. 505, which would allow satellite operators to retransmit to any subscriber in
the state of Oklahoma – not just those in adjacent counties—the signals of any broadcast station located in that state.
17 Paul Gallant, an analyst with Stanford Washington Research Group, reportedly stated that mandatory provision of
local-into-local service in all markets “would impose significant new costs on Dish Network and DirecTV and generate
virtually no new revenue” because the markets in question are so small. See Todd Shields, “DirecTV, Dish May Face
Requirement for More Local TV (Update1),” Bloomberg.com, February 23, 2009, available at http://www.bloomberg.
com/apps/news?pid=newsarchive&sid=ayQ_vo3nJImo, viewed on April 27, 2009.
18 According to the written testimony of Charles W. Ergen, chairman, president, and chief executive officer of DISH
Network Corporation, submitted for the hearing on “Reauthorization of the Satellite Home Viewer Extension and
Reauthorization Act,” before the Subcommittee on Communications, Technology, and the Internet, Committee on
Energy and Commerce, U.S. House of Representative, February 24, 2009, at p. 2, “DISH provides local service in 178
markets today, reaching 97 percent of households nationwide.” According to the written testimony of Bob Gabrielli,
senior vice president, broadcasting operations and distribution, DIRECTV, Inc., before the House Judiciary Committee,
February 25, 2009, at p. 10, “DIRECTV today offers local television stations by satellite in 150 of the 210 local market
in the United States, serving 95 percent of American households. (Along with DISH Network, we offer local service to
98 percent of American households.)”
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and four modifications to Section 119 of the Copyright Act “to accommodate the
conversion from analog to digital broadcasting.”19 For example, under current
law, satellite subscribers who are not able to receive a grade B quality analog
television signal20 (and are thus considered “unserved”) are allowed to receive
distant signals if their satellite operator is not offering local-into-local service,
and some unserved subscribers are allowed to receive distant signals even if their
operator does offer local-into-local service. Although the definition of unserved is
based on analog technology, those households also are considered unserved for
digital service and thus may in some circumstances be allowed to receive distant
digital signals by satellite.
• Carriage of Adjacent Network Affiliate Signals in Those Markets That Lack
a Network Affiliate: Currently, in local markets that are not served by affiliates
of each of the four major broadcast television networks, satellite operators may
retransmit the distant signals of distant network affiliate stations.21 Some
observers have proposed that, rather than allowing satellite operators to import
the signals of any distant network affiliates, such importation of distant network
affiliate signals into a so-called “short market” be limited to the signals of
affiliates in an adjacent, in-state market, to maximize the likelihood that the
programming provided would contribute to localism.22
• Re-Defining Local Markets in the Relevant Satellite and Cable Statutes: The
current regulatory frameworks for both satellite and cable distinguish between
the retransmission of local and distant signals and require that local markets be
defined by the Designated Market Areas (DMAs) constructed and published by
Nielsen Media Research.23 The viewing patterns that underlie these Nielsen
19 Marybeth Peters, Register of Copyrights, written statement before the House Judiciary Committee, hearing on
Copyright Licensing in a Digital Age: Competition, Compensation and the Need to Update the Cable and Satellite TV
Licenses,” at Appendix 1, February 25, 2009. The proposed modifications to section 111 include revising section 111,
and its terms and conditions, to expressly address the retransmission of digital broadcast signals; amending the
definition of “local service area of a primary transmitter” to include references to digital station “noise limited service
contours” for purposes of defining the local/distant status of noncommercial educational stations (and certain UHF
stations) for statutory royalty purposes; amending the statutory definition of “distant signal equivalent” (DSE) to clarify
that the royalty payment is for the retransmission of the copyrighted content without regard to the transmission format;
amending the definitions of “primary transmission” and “secondary transmission”, as well as the “station” definitions
in section 111(f) so they comport to the amended definition of DSE; and clarifying that each multicast stream of a
digital television station shall be treated as a separate DSE for section 111 royalty purposes. The proposed
modifications to section 119 include replacing the existing Grade B analog standard with the new noise-limited digital
signal intensity standard; adopting the Individual Location Longley Rice (ILLR) predictive digital methodology for
predicting whether a household can receive an acceptable digital signal from a local digital network station; mandating
that the FCC adopt digital signal testing procedures for purposes of determining whether a household is actually
unserved by a local digital signal; and deleting various references in section 119 to “analog” unless that reference is to
low power television stations that have not yet converted to digital broadcasting.
20 The Grade B contour around a station’s transmitter identifies the geographic area in which the quality of picture is
expected to be satisfactory to the median observer at least 90% of the time for at least 50% of the receiving locations
within the contour, in the absence of interfering co-channel and adjacent channel signals. (See Warren Communications
News, Television & Cable Factbook 2009, at p. A-16.
21 47 U.S.C. § 339.
22 See, for example, Cheryl Bolen, “Boucher Advises Broadcasters to Negotiate Performance Royalty,” BNA Daily
Report for Executives, April 1, 2009.
23 The statutory provisions for satellite explicitly require the use of Nielsen’s DMAs. (17 U.S.C. § 122(j)(2)(A) and
(C).) The statutory provisions for cable instructed the FCC to make market determinations “using, where available,
commercial publications which delineate television markets based on viewing patterns.” (47 U.S.C. § 534(h)(1)(C).)
(continued...)
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markets are primarily the result of the physical locations of the various broadcast
television stations and the reach of their signals. (They also reflect the boundaries
of the exclusive broadcast territories that each of the three original television
broadcast networks – ABC, CBS, and NBC – had incorporated into their
contracts with their local affiliate stations decades ago.) DMAs do not take into
account state boundaries. Some parties argue that U.S. statutes and rules would
more effectively foster the dissemination of state and local news and public
affairs information if they incorporated local market definitions that more closely
conformed with state borders.
• Mandatory Carriage of All the Programming Streams of Local
Noncommercial Educational Television Stations: By statute, providers of
direct broadcast satellite service (DirecTV and DishTV) must reserve between 4
and 7 percent of their channel capacity exclusively for noncommercial
programming of an educational or informational nature.24 But they are not
specifically required to retransmit the signals of local broadcast television
stations; they are allowed to do so on condition of carrying the primary signals of
all local stations that give permission. With the digital transition, broadcasters
now are able to broadcast multiple digital programming streams over their
licensed spectrum. Representative Eshoo has introduced H.R. 1155, which would
require that satellite operators retransmit to each subscriber the digital signals
(including all free, over-the-air digital programming streams) of each qualified
noncommercial educational television station located in the subscriber’s local
market.
• Regulatory Parity for Satellite and Cable Operators: As will be discussed in
the next section, although satellite and cable operators compete directly with one
another in most markets, there are significant differences in the regulatory
frameworks under which they operate. Some observers have proposed that the
retransmission, copyright, and other rules under which these competing
multichannel video programming distributors operate should be rationalized to
eliminate artificial competitive advantages or disadvantages. For example, the
Copyright Office, in a report to Congress required by SHVERA,25 has proposed
that the gross receipts royalty system for cable retransmission of distant
broadcast signals in section 111 of the Copyright Act be replaced by a flat fee per
subscriber system of the sort for satellite retransmission of distant broadcast
signals in section 119 of the Copyright Act. The Copyright Office also has
proposed26 that the provisions defining satellite subscriber eligibility for
receiving distant signals in section 119 (the “unserved household” provisions) be
replaced by the imposition on satellite operators of the FCC’s network non-
(...continued)
Nielsen had already delineated such television markets, assigning geographic areas to markets based on predominant
viewing patterns in order to construct ratings data for advertisers, and the FCC therefore adopted Nielsen’s market
delineations.
24 47 U.S.C. § 335(b)(1).
25 Satellite Home Viewer Extension and Reauthorization Act Section 109 Report, A Report of the Register of
Copyrights, June 2008, at pp. ix-xi and 94-180.
26 Satellite Home Viewer Extension and Reauthorization Act Section 109 Report, A Report of the Register of
Copyrights, June 2008, at pp. 167-168.
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duplication27 and syndicated exclusivity rules28 (but not its sports blackout29
rules), which currently are used to limit the retransmission of distant broadcast
signals by cable operators.
• Proposals to Modify Current Retransmission Consent Rules: Under the
“retransmission consent/must carry” election adopted by Congress in 1992, every
three years each local commercial television broadcast station licensee must
choose between (1) negotiating retransmission consent agreement with the cable
systems operating in its service area, and thus receiving compensation from the
cable operators for such carriage, or (2) requiring each cable system operating in
the service area to carry its signal, but receiving no compensation for such
carriage.30 Broadcast stations with popular programming tend to choose the first
option; those with less popular programming, the latter. These rules apply to
telephone companies, such as Verizon and AT&T, that offer MVPD services that
27 47 C.F.R. §§ 76.92, 76.93, 76.106, 76.120, and 76.122. Commercial television station licensees that have contracted
with a broadcast network for the exclusive distribution rights to that network’s programming within a specified
geographic area are entitled to block a local cable system from carrying any programming of a more distant television
broadcast station that duplicates that network programming. Commercial broadcast stations may assert these non-
duplication rights regardless of whether or not the network programming is actually being retransmitted by the local
cable system and regardless of when, or if, the network programming is scheduled to be broadcast. This rule applies to
cable systems with more than 1,000 subscribers. Generally, the zone of protection for such programming cannot exceed
35 miles for broadcast stations licensed to a community in the FCC’s list of top 100 television markets or 55 miles for
broadcast stations licensed to communities in smaller television markets. The non-duplication rule does not apply when
the cable system community falls, in whole or in part, within the distant station’s Grade B signal contour. In addition, a
cable operator does not have to delete the network programming of any station that the FCC has previously recognized
as “significantly viewed” in the cable community. With respect to satellite operators, the network non-duplication rule
applies only to network signals transmitted by superstations, not to network signals transmitted by other distant
network affiliates.
28 47 C.F.R. §§ 76.101, 76.103, 76.106, 76.120, and 76.123. Cable systems that serve at least 1,000 subscribers may be
required, upon proper notification, to provide syndicated protection to broadcasters who have contracted with program
suppliers for exclusive exhibition rights to certain programs within specific geographic areas, whether or not the cable
system affected is carrying the station requesting this protection. However, no cable system is required to delete a
program broadcast by a station that either is significantly viewed in the cable community or places a Grade B or better
contour over the community of the cable system. With respect to satellite operators, the syndicated exclusivity rule
applies only to syndicated programming transmitted by superstations, not to syndicated programming transmitted by
other distant broadcast stations.
29 47 C.F.R. §§ 76.111, 76.120, 76.127, and 76.128. A cable system located within 35 miles of the city of license of a
broadcast station where a sporting event is taking place may not carry the live television broadcast of the sporting event
on its system if the event is not available live on a local television broadcast station, if the holder of the broadcast rights
to the event, or its agent, requests such a blackout. The holder of the rights is responsible for notifying the cable
operator of its request for program deletion at least the Monday preceding the calendar week during which the deletion
is desired. If no television broadcast station is licensed to the community in which the sports event is taking place, the
35-mile blackout zone extends from the broadcast station’s licensed community with which the sports event or team is
identified. If the event or local team is not identified with any particular community, (for instance, the New England
Patriots), the 35-mile blackout zone extends from the community nearest the sports event which has a licensed
broadcast station. The sports blackout rule does not apply to cable television systems serving fewer than 1,000
subscribers, nor does it require deletion of a sports event on a broadcast station’s signal that was carried by a cable
system prior to March 31, 1972. The rule does not apply to sports programming carried on non-broadcast program
distribution networks such as ESPN. These networks, however, may be subject to private contractual blackout
restrictions. Similarly, the sports blackout rule applies to satellite operators only if a local television broadcast station is
not carrying the local sports event. If a local broadcast station does not have permission to carry the local game, then no
other broadcaster’s signal displaying the game can be shown in the protected local blackout zone. The sports blackout
rule applies to a satellite operator’s retransmission of nationally distributed superstations and network affiliated
stations. The rule exempts satellite operators with fewer than 1,000 subscribers in the protected area.
30 47 U.S.C. §§ 325, 338, and 534.
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meet the definition of cable service. The rules are somewhat different for satellite
providers of MVPD service. If a satellite operator offers local-into-local service
in a market, it must retransmit the primary signals of every broadcast station in
the local market that gives retransmission permission. Thus all MVPDs must
obtain the permission of a local station in order to retransmit that station’s
signals. In 1992, cable operators were the only MVPDs in a broadcaster’s service
area and they could refuse to pay compensation for retransmitting the
broadcaster’s signal because the broadcaster would lose advertising revenues if
its signal were not carried by the cable operator. Now that there are competing
MVPDs, broadcasters with popular, “must have” programming are in a stronger
negotiating position, because if an MVPD fails to reach a retransmission
agreement with a broadcaster it could risk losing many subscribers to a
competing MVPD that has such an agreement. Local broadcasters today often
receive per subscriber fees from MVPDs for the retransmission of their
programming, just as cable networks do. Small cable operators represented by
the American Cable Association have argued that they are placed in an especially
disadvantageous position with broadcasters in retransmission consent
negotiations, because they must compete against large satellite and telephone
companies that can negotiate better terms with local broadcasters. They therefore
have proposed that retransmission consent rules be modified to prohibit
broadcasters from charging discriminatory rates for retransmission consent31 and
that the terms of all retransmission consent agreements, which currently are kept
confidential, be made public to allow parties and the FCC to detect any
discrimination.
• Proposals to Eliminate the Statutory Copyright Licensing System for Cable
and Satellite Retransmission of Distant Broadcast Signals: The United States
Copyright Office has proposed that Congress abolish sections 111 and 119 of the
Copyright Law, arguing that the statutory licensing systems created by these
provisions result in lower payments to copyright holders than would be made if
compensation were left to market negotiations.32 According to the Copyright
Office, the cable and satellite industries no longer are nascent entities in need of
government subsidies, have substantial market power, and are able to negotiate
private agreements with copyright owners for programming carried on distant
broadcast signals. Other parties argue that the current licensing systems are
efficient and the that purpose of copyright law is to balance the potentially
conflicting goals of fostering the dissemination of copyrighted material and
allowing the copyright holder to be compensated by giving the copyright holder a
limited monopoly over its material; they oppose a rule that allows the copyright
holder to fully exploit its monopoly power to receive whatever the market would
bear.33
31 See, for example, the Statement of Matthew M. Polka, president and CEO, American Cable Association, before the
Federal Communications Commission En Banc Hearing on Broadband and the Digital Future, Pittsburgh, PA, July 21,
2008.
32 Satellite Home Viewer Extension and Reauthorization Act Section 109 Report, A Report of the Register of
Copyrights, June 2008, at p. xiv.
33 See, for example, the website of Public Knowledge at http://www.publicknowledge.org/issues/copyright.
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Differences in the Current Retransmission and
Copyright Rules for Satellite and Cable
The four statutes that created and modified the regulatory framework for satellite sought to foster
satellite provision of MVPD service as a competitive alternative to cable service and, as satellite
became a viable competitor, to make the satellite and cable regulatory regimes more similar. But
many differences remain. For example,
• Cable operators must abide by the retransmission consent/must carry elections of
the broadcast stations located in their DMAs and therefore must retransmit to
their subscribers the primary signals of the local stations unless a station does not
grant retransmission permission. While satellite operators must retransmit the
signals of all eligible local broadcast stations if they choose to retransmit any, and
such retransmission is subject to obtaining the retransmission permission of the
station, an operator can choose not to offer any local signals by not offering
local-into-local service in a DMA.
• Both satellite and cable operators are subject to restrictions on the distant signals
that they can offer their subscribers. The primary regulatory mechanisms for
restricting cable retransmission of distant signals are the FCC’s network non-
duplication and syndicated exclusivity rules that require the cable operator to
black out distant programming that duplicates local programming. The primary
mechanisms for restricting satellite retransmission are a complex array of rules
that confine the retransmission of distant network signals to those subscribers
deemed “unserved.”
• Although both satellite and cable operators are subject to copyright licensing for
the retransmission of distant superstation and network signals, the license fees for
satellite operators are set on a flat per subscriber, per distant station carried basis,
while the license fees for cable operators are based on the cable operator’s gross
revenues.
• Cable operators are required to retransmit to their subscribers the signals of
stations that are located outside the DMA in which the cable system is located but
that are “significantly viewed” by those households in the cable service area that
do not subscribe to any MVPD provider, if the significantly viewed station gives
retransmission permission. In contrast, satellite operators are permitted, but not
required, to retransmit to their subscribers the signals of significantly viewed
stations.
Table 1 compares some key retransmission and copyright provisions for satellite and cable to
identify similarities and differences.34
34 The table does not present an exhaustive list of retransmission and copyright rules. Nor does it present the detailed
eligibility requirements for a subscriber to be considered “unserved;” the eligibility rules are replete with exceptions
and many pages long.
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Table 1. Current Retransmission and Copyright Rules
for Satellite and Cable Operators
Issue
Satellite Operators
Cable Operators
Local Signals:
A satellite operator is allowed, but not required, to
A cable operator is required to retransmit
Retransmission
retransmit to its subscribers the signals of
to its subscribers the primary signals of all
broadcast television stations in their local market
the full-power commercial broadcast
(the DMA in which the subscriber is located); if a
television stations, qualified
satellite operator chooses to offer such “local-into-
noncommercial educational television
local” service, it must provide the primary signals of stations, and qualified low-power
all the full-power stations in that local market,
television stations located in the DMA in
subject to obtaining local station permission. (47
which the cable operator is located, up to
U.S.C. 338(a)(1)) If the signals of two commercial
a certain percentage of its capacity, and
stations in the DMA are substantially duplicative,
subject to obtaining local station
the satellite operator need not carry both signals,
permission; a cable operator may
unless they originate in different states. (47 U.S.C.
retransmit the signals of other (non-
338(c)) The satellite operator may include in its
qualified noncommercial and low power
local-into-local service the signals of local low
stations) local stations, subject to
power stations. (47 U.S.C. 338(a)(3))
obtaining the permission of those stations.
(47 U.S.C. 534(a) and (b) and 535(a) and
(b) and 325(b))
Local Signals:
Secondary transmission of a local broadcast signal
Secondary transmission of a local
Copyright
by a satellite operator is subject to statutory
broadcast signal by a cable operator is not
copyright licensing with no royalty fee. (17 U.S.C.
considered an infringement of copyright.
122(c))
(17 U.S.C. 111(b) and 47 U.S.C. 534(a)
and (b) and 535(a) and (b))
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Issue
Satellite Operators
Cable Operators
Distant Signals:
A satellite operator is allowed to retransmit (1) the A cable operator is allowed to retransmit
Retransmission
signals of distant “superstations” to al of its
the signals of all distant broadcast
subscribers, (2) the signals of distant “significantly
television station signals subject to
viewed” stations to subscribers located in the
complying with the FCC’s network non-
markets for which those stations qualify as
duplication, syndicated exclusivity, and
significantly viewed, and (3) the signals of distant
sports blackout rules and subject to
network affiliated stations to “unserved”
obtaining the permission of those distant
subscribers—subscribers who cannot receive local
stations other than superstations. (47
network affiliated stations either because the
U.S.C. 325(b)(1) and 325(b)(2)(D) and 47
satellite operator does not offer local-into-local
CFR 76.92-76.111) An MVPD does not
service in their local market and they are located
need to obtain consent to retransmit the
too far from the transmitter to receive signals of a
signal of a noncommercial television
certain quality over-the-air or because not al four
broadcast station. (47 U.S.C. 325(b)(2)(A))
of the major national networks have affiliates in
their market; a satellite operator may not
retransmit other distant signals to its subscribers
except for a smal number of grandfathered
situations in which subscribers who do have access
to local-into-local service continue to be eligible to
receive distant signals from their satellite operator.
(47 U.S.C. 339(a) and (c) and 340(b)(3)) An MVPD
does not need to obtain consent to retransmit the
signal of a noncommercial television broadcast
station. (47 U.S.C. 325(b)(2)(A)) A satellite
operator does not need to obtain consent to
retransmit the signal of a superstation if it complies
with the FCC’s network non-duplication,
syndicated exclusivity, and sports blackout rules.
(47 U.S.C. 325(b)(2)(B)) It does not need to obtain
consent to retransmit distant network station
signals to “unserved” subscribers. (47 U.S.C.
325(b)((2)(C)) It must obtain consent to
retransmit the signals of a significantly viewed
station, but does not have to comply with the
FCC’s network non-duplication, syndicated
exclusivity, and sports blackout rules. (47 U.S.C.
340(d)(2) and 340(e)) Where a satellite operator
offers local-into-local service, it can retransmit the
signals of significantly viewed stations only to those
subscribers who take local-into-local service. (47
U.S.C. 340(b)(1) and (2))
Distant Signals:
A satellite operator must pay a copyright license
A cable operator must pay a copyright
Copyright
fee for the public performance of superstation and
license fee for the public performance of
distant network television signals, but there is a
all distant signals carried except those of
royalty-free license for the public performance of
significantly viewed stations. Royalty fees
the signals of significantly viewed stations; royalty
are based on a percentage of the cable
fees are calculated on a flat per subscriber, per
operator’s gross revenues. (17 U.S.C.
distant station carried basis; there are separate
111(d))
royalty fee rates for superstations and for network
stations, and for analog and digital signals. (17
U.S.C. 119(a)(1), (2), and (3))
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Issue
Satellite Operators
Cable Operators
Exceptions
Satellite operators are allowed to retransmit, to
A cable operator may elect to retransmit
subscribers located in certain counties or states (in
to subscribers in Umatilla, Grant, Malheur,
Vermont, New Hampshire, Oregon, and
and Wallowa counties in Oregon the
Mississippi) that are assigned to DMAs whose local
broadcast signals of any television
broadcast stations are in another state, certain in-
broadcast station in Oregon that any cable
state but non-local market signals; retransmission of operator was retransmitting to
these distant signals is subject to obtaining the
subscribers in those four counties on
permission of the stations, meeting the
January 1, 2004. (47 U.S.C. 341)
requirements of the network non-duplication and
syndicated exclusivity rules, and making royalty
payments under the compulsory copyright license
for the secondary transmission of distant broadcast
signals. (17 U.S.C. 119(a)(2)(C)(i)-(iv) and 47 U.S.C.
341) The geographic areas in Alaska that are not in
any Nielsen DMA are assigned by satellite carriers
to one of the DMAs in that state in order to allow
the carriers to offer subscribers in those areas the
local-into-local service for the DMA to which they
are assigned. (17 U.S.C. 19(a)(16)) Satellite carriers
with more than 5,000,000 subscribers who offer
service in Alaska/Hawaii must retransmit to
subscribers in those states all of the analog
broadcast signals originating in Alaska/ Hawaii;
these signals must be made available to substantially
all of the subscribers in their DMAs and the signals
from at least one of the local markets in the state
must be made available to substantially all of the
subscribers in the state not located in a DMA; the
cost to subscribers of such transmissions shal not
exceed the cost of retransmission of local television
stations in other states. (47 U.S.C. 338(a)(4))
Source: Statutory and regulatory citations are provided within the table.
Providing the Signals of Non-Local but In-State
Stations to Orphan Counties
Under current statutes and rules, 43 states have one or more counties that are assigned to local
markets for which the principal city (from which all or most of the local television signals
originate) is outside their state.35 As a result, satellite (and, in many situations, cable) subscribers
in these “orphan counties” may not be receiving signals from in-state broadcast stations and may
not be receiving news, sports, and public affairs programming of interest in their state. Many
households and local and state elected officials in these counties have contacted their Members of
Congress to request that satellite operators be allowed (and cable operators, who currently are
allowed, be encouraged) to retransmit to subscribers in the counties the signals of broadcast
stations in in-state, but non-local, markets.
35 See CRS Report RL32641, “Localism”: Statutes and Rules Affecting Local Programming on Broadcast, Cable,
and Satellite Television, by Charles B. Goldfarb, Table 1, for a state-by-state listing of these counties as of 2003.
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Proponents of the retransmission of non-local but in-state broadcast signals to MVPD subscribers
located in orphan counties cite the following programming benefits:
• Sports programming – Many subscribers have a strong allegiance to the sports
teams of their home state universities, whose games are more likely to be
broadcast by in-state broadcast stations than by stations located in another state.
Similarly, many subscribers have a strong allegiance to professional sports teams
located in the state, whose games are more likely to be broadcast by in-state
broadcast stations than by stations located in another state.36 Stations located in
bordering states are especially unlikely to broadcast these sporting events of
interest to the subscribers in orphan counties if the state universities in those
bordering states belong to different sports conferences or if those bordering states
have their own professional sports teams. There is ample market evidence, in the
form of cable sports networks being able to command by far the highest per
subscriber fees, that many MVPD subscribers highly value sports programming
and therefore allowing MVPDs to offer non-local but in-state sports
programming would increase the well-being of those subscribers.
• Weather and related public safety programming – There tend to be prevailing
weather patterns in terms of the general direction that storms, tornadoes, and
other inclement weather take, for example from west to east or from south to
north. Public safety is fostered if MVPD subscribers are able to receive the
broadcast signals of stations that experience and report on the same weather
patterns the subscribers experience. Subscribers located in orphan counties that
do not experience the same weather patterns as the local stations would benefit
from receiving weather information provided by non-local but in-state stations
that do experience and report on the same weather patterns.
• State news programming – Typically, broadcast television stations provide more
local news than state news. Frequently, however, orphan counties are located
quite far away from both the local stations in their DMAs and from the closest
non-local, but in-state stations. As a result, neither the local nor the in-state
stations are likely to provide much coverage of local news in those orphan
counties. Television stations, however, typically do provide some news coverage
of state-wide elections and other state-wide issues. Proponents of the
retransmission of in-state broadcast signals to orphan counties claim that the
public interest, as well as the private interest of subscribers, would benefit from
the retransmission of such state news programming to households in orphan
counties.
• State and local political advertising – Candidates for elective office at both the
state and local level often try to communicate with voters through broadcast
television advertising. To the extent that candidates, to reach households located
in orphan counties, must purchase advertising time on television stations
originating in other states and that primarily reach viewers who live in those
other states, the efficiency of political advertising is reduced and the cost
increased. If MVPDs could retransmit to subscribers located in orphan counties
36 Some professional sports leagues divide the country into geographic zones for which particular teams are given the
rights to be the exclusive team to have their games broadcast. In these situations, broadcasters located in neighboring
states might be contractually prohibited from broadcasting the games of a team located in a neighboring state.
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the signals of in-state broadcast stations, political candidates might be able to
save in advertising purchases made to out-of-state stations and still reach
households located in those counties.
Broadcasters respond that the potential public interest gains from allowing the retransmission of
distant in-state programming would be outweighed by decreases in the quality and quantity of
local programming local stations could offer because they would be financially harmed by the
importation of the distant signals.37 Broadcast network affiliates claim that, in addition to
broadcast advertising revenues falling, MVPDs could play hardball in their retransmission
negotiations with the local stations, fail to reach a retransmission consent agreement, and then
simply carry the signals of a distant in-state network affiliate at a lower price. With lower (or
totally lost) retransmission consent revenues, broadcasters argue, they would have to cut back on
local news programming, which is expensive to produce.
The actual impact – both on public policy objectives such as localism and on local broadcast
station revenues – of allowing MVPDs to retransmit in-state signals to their subscribers in orphan
counties is likely to be sensitive to the specific new retransmission and copyright rules that are
adopted. Moreover, whatever those rules may be, the actual impact is likely to vary significantly
from market to market.
There is no single model orphan county. Allowing MVPDs to retransmit distant in-state signals to
a sparsely populated rural county that is geographically distant from both its local broadcast
stations and from the distant in-state stations (for example, to Montezuma and La Plata counties
in southwestern Colorado, which are assigned to the Albuquerque, NM DMA) will likely have a
different market impact than allowing MVPDs to retransmit distant in-state signals to a highly
urbanized county that is geographically close to its local stations, but across the state line (for
example, to Dona Ana county in southern New Mexico, which includes the city of Las Cruces
and is just across the state line from, but assigned to the DMA of, El Paso, TX). It is unlikely that
the Albuquerque broadcast stations, which have 677,740 television households in their DMA,
provide much programming (or advertising) that addresses the local needs and interests of the
27,540 television households in Montezuma and La Plata counties.38 It also is unlikely that the
distant in-state stations in Denver would provide programming or advertising that addresses the
local needs and interests (including weather information) of households in Montezuma and La
Plata counties, though those stations are likely to provide some Colorado sports, news, and
political programming of state-wide interest. In contrast, the El Paso broadcast stations, which
have 302,470 television households in their DMA, may well provide programming and
advertising that addresses the local needs and interests of the 68,330 television households in
Dona Ana county. The in-state stations in Albuquerque are unlikely to provide local programming
(including weather reports or local advertising) of interest to the households in Dona Ana county,
but they are likely to provide some New Mexico sports, news, and political programming of state-
wide interest.
It is difficult to project what the impact on the retransmission consent revenues of local
broadcasters would be from the importation of in-state signals into orphan counties, or if that
37 See, for example, the written statement of David K. Rehr, president and CEO, the National Association of
Broadcasters, submitted to the United States House of Representatives Committee on the Judiciary, “Hearing on
Copyright Licensing in a Digital Age: Competition, Compensation and the Need to Update the Cable and Satellite TV
Licenses,” February 25, 2009.
38 Statistics in this paragraph are from Nielsen DMA Market Atlas, Nielsen Media Research, 2008.
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impact would be greater in rural or urban orphan counties. There are potentially conflicting
market forces at work. For example, on one hand, since the populations of Montezuma and La
Plata counties are small, and the local programming of the Albuquerque stations is not likely to be
responsive to the needs or interests of, or highly demanded by, the residents of those counties, it is
unlikely that the retransmission consent revenues that Albuquerque stations receive from MVPDs
serving Montezuma and La Plata counties represent a significant portion of those stations’
revenue streams. In contrast, because the local programming of the El Paso stations is likely to be
responsive to the needs and interests of the residents of Dona Ana county, which has a substantial
population, it is possible that the retransmission consent revenues that El Paso stations receive
from MVPDs serving Don Ana county do represent a significant portion of those stations’
revenue streams. On the other hand, given that small cable companies serving rural communities
(such as those serving Montezuma and La Plata counties) tend to be in less favorable
retransmission consent negotiating positions than larger cable companies serving more populous
areas (such as Comcast, which serves Las Cruces, the major city in Dona Ana county), on a per
subscriber basis more retransmission consent revenues may be generated in more rural counties.
Currently, cable operators may retransmit to their subscribers in orphan counties the signals of
any non-local station located in the state, subject to meeting the FCC’s network non-duplication,
syndicated exclusivity, and sports blackout rules, obtaining the permission of those distant
stations, and paying a copyright royalty fee. In many cases, the in-state stations are prohibited
from granting retransmission consent by provisions in their network-affiliate contracts – though
data are not available to shed light on how common such contractual prohibitions are or how
often (if at all) cable companies have sought such retransmission consent. Currently, satellite
operators may only retransmit the in-state signals of stations that the FCC has determined are
“significantly viewed” and of stations affiliated with networks for which subscribers in the
orphan county cannot receive the over-the-air signal of a local network-affiliated station; they
must pay a copyright fee for retransmitting the signals of network-affiliated stations, but not
significantly viewed stations.
If Congress decides to foster MVPD retransmission of programming of state-wide interest to
subscribers in orphan counties, it would have a number of regulatory parameters available in
considering modification of current retransmission and copyright rules. These include:
• which in-state stations’ signals the MVPDs may retransmit: The more non-
local, but in-state stations that an MVPD may negotiate with to retransmit their
signals to subscribers in orphan counties, the greater the potential availability of
programming of state-wide interest to those subscribers (though many of these
stations might not be airing programming of local interest in the orphan
counties). At the same time, the greater the number of potential broadcast signals
available to the MVPD, the greater the opportunity for the MVPD to take a hard
line when negotiating retransmission consent with local broadcasters. The
broadest option would allow MVPDs to retransmit to their subscribers in orphan
counties the signals of any station located in the state; this would maximize both
the potential availability of programming of state-wide interest and the potential
negative impact on local broadcasters. A second option would allow MVPDs to
retransmit to their subscribers in orphan counties the signals of any station
located in the state capital. This option appears to implicitly assume that the
broadcast stations in state capitals are most likely to carry news and public affairs
programming of state-wide interest. Critics have indicated that state capitals may
be located very far from orphan counties, and thus be unlikely to provide
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programming of local interest, such as weather forecasts, to households in the
counties. They have proposed that if the retransmission of non-local in-state
signals is allowed at all, it should be limited to the signals of stations that are in
markets adjacent to the orphan counties. One such proposal, which has been
floated but not formally introduced in legislation, would limit retransmission to
the signals of stations in markets adjacent to (or, if there were no such markets,
the market closest to) orphan counties; a broadcast station’s signals could be
retransmitted within an adjacent DMA, but (1) only if that adjacent DMA covers
more than one state, (2) only to counties in the DMA that are within the same
state as the broadcast station, and (3) only if those counties have no home-state
affiliate of the same network.39
• whether to limit the programming on those stations that can be
retransmitted by applying the FCC’s network non-duplication, syndicated
exclusivity, and sports blackout rules to such retransmission: Whichever in-
state stations’ signals may be retransmitted, MVPDs will find it less attractive to
retransmit these signals if such retransmission is subject to the FCC’s network
non-duplication and syndicated exclusivity rules, which allow the local station to
require the MVPD to black out all network and syndicated programming on the
retransmitted signal even if the local station was not being carried by the
MVPD.40 Although these rules only apply within a 35 to 55 mile radius of the
broadcast station, and many orphan counties are farther away from the local
broadcast stations than that, many counties, or parts thereof, do lie within those
mileage limits.
• whether there should be any modifications to the retransmission consent
requirements in Section 325 of the Communications Act to explicitly address
the retransmission of signals into orphan counties: Since most broadcasters
oppose the retransmission of distant signals into their markets, they may not be
willing to grant MVPDs permission to retransmit their signals to other markets.
Under current rules, MVPD retransmission of non-local signals is usually, but not
always, subject to obtaining the retransmission consent of the broadcast station.
Thus, even if an MVPD wants to retransmit a non-local, in-state signal to its
subscribers in an orphan county it may not be able to do so. One of the provisions
in the Four Corners Television Access Act of 2009 would exempt MVPDs from
the requirement to obtain retransmission consent from in-state broadcasters in
order to retransmit their signals to the two orphan counties. By contrast, under
the adjacent underserved county proposal, MVPDs would be required to obtain
retransmission consent from in-state broadcast stations in order to retransmit their
39 Under this proposal (hereinafter referred to as the “adjacent underserved county proposal”), an “adjacent market”
would be defined as any local market adjacent to, and partially but not entirely in the same state as, the local market in
which a station’s community of license is located; an “adjacent underserved county” would be defined as a county
within the station’s adjacent market that is both (a) located in the same state as the station’s community of license, and
(b) not within the local market of any other station that is both affiliated with the same network and located in the same
state as such other station’s community of license. In addition, a county that is in a local market containing no in-state
network stations, but which is not located in the adjacent market of any in-state network station, would be considered to
be in the adjacent market of the nearest local market located in whole or in part within the state in which the county is
located.
40 The adjacent underserved county proposal explicitly would not make the retransmission of in-state signals into
adjacent underserved counties subject to the FCC’s network non-duplication and syndicated exclusivity requirements.
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signals to orphan counties.41 At the same time, under the adjacent underserved
county proposal a local broadcast station could not block MVPDs from
retransmitting non-local, in-state station signals into orphan counties by
conditioning MVPD retransmission of its own signal on the MVPD not
retransmitting non-local, in-state signals.
• whether existing provisions in network-affiliate contracts that prohibit
affiliates from granting retransmission rights to their signals outside their
local markets should be pre-empted to ensure that in-state programming is
available to subscribers in orphan counties: Although systematic data are not
available, it appears that many current network-affiliate contracts include
provisions that prohibit the affiliates from granting MVPDs permission to
retransmit their signals beyond the local market. These contractual provisions
could render ineffective rules allowing MVPDs to retransmit in-state signals, if
such retransmission were contingent on obtaining the retransmission consent of
the broadcast station, as for example would be required under the adjacent
underserved county proposal. If it is the intention of Congress to maximize the
likelihood that residents of orphan counties who subscribe to MVPD service
receive non-local, in-state broadcast signals, it may be necessary to pre-empt the
restrictive provisions in the network-affiliate contracts. Such action would,
however, represent intrusive government intervention into the contractual
relationship between private parties. One possible approach would be to exempt
MVPDs that want to retransmit in-state signals to their orphan county subscribers
from the requirement that they obtain the retransmission consent of the
broadcaster. This might or might not be effective, depending on the exact
wording of the relevant provisions in the network-affiliate contracts. If the
provisions only prohibit stations from granting retransmission consent, but do not
restrict the stations from allowing the signals to be retransmitted, then it might be
sufficient to add a provision to section 325(b)(2)(C), which lists the exceptions to
the retransmission consent requirements. If the provisions include broader
restrictions, then it might be necessary to prohibit certain contractual
relationships. There is not sufficient publicly available information on those
contractual provisions to be certain what statutory language would be needed to
pre-empt current restrictive provisions.
• whether MVPDs should be required to retransmit the signals of all local
broadcast stations in an orphan county as a precondition for the right to
retransmit non-local, in-state signals to subscribers in the orphan county:
One way to constrain the negotiating leverage that an MVPD could gain if it
were allowed to retransmit the signals of non-local, in-state stations to its orphan
county subscribers might be to condition such retransmission on the MVPD
reaching retransmission consent with, and carrying the signals of, all the local
stations in the county. The adjacent underserved county proposal includes this
condition.
• what the copyright treatment should be for the retransmission of distant in-
state signals to subscribers in orphan counties: The greater the copyright
41 Unless, as discussed below, the station is prohibited, under provisions of its network-affiliate contract, from granting
retransmission consent to MVPDs to retransmit their signals beyond their local markets.
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license fee that an MVPD must pay to retransmit non-local, in-state signals to
orphan county subscribers, the less the incentive to retransmit those signals.
Currently, satellite and cable providers must pay royalty fees for the
retransmission of superstation and distant network signals, but no fee for the
retransmission of the signals of significantly viewed stations. The adjacent
underserved county proposal would allow both satellite and cable operators to
retransmit non-local, in-state signals to orphan county subscribers on a royalty-
free basis. The Four Corners Television Access Act of 2009 would deem each
television broadcast station broadcasting in the DMA of a state capital as a
“significantly viewed” station. Because under current rules the signals of
significantly viewed stations can be retransmitted on a royalty free basis, MVPDs
would be allowed to retransmit the Denver stations to the two orphan counties in
Colorado without making copyright payments.
Author Contact Information
Charles B. Goldfarb
Specialist in Telecommunications Policy
cgoldfarb@crs.loc.gov, 7-7252
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