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

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
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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
1See 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.
217 U.S.C. § 119(d)(10).
3See 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).
417 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.
517 U.S.C. § 119(a)(4).
617 U.S.C. §119(a)(5)(A). See also 17 U.S.C. §§ 502-506, 509.
717 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.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
8See H.Rept. 100- 887 (II), 100th Cong., 2d Sess. 19-20 (1988).
9See CBS, Inc. v. PrimeTime 24 Joint Venture, 9 F. Supp. 2d 1333 (S. Dist. Fl. 1998).
10Specifically, 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.
11The 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.
12Id. 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.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
13Id.
14Id. at 1338.
159 F. Supp. 2d at 1339-43.
16Id. at 1339.
17Id.
18Id. at 1340.
19Id. at 1343-44.

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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
20See 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.).
21See Communications Daily, vol. 18, no. 216 at p. 9 (November 9, 1998).
22See CBS, Inc. v. PrimeTime 24 Joint Venture, 1998 U.S. Dist. LEXIS 20488 (S.D. Fl. December
30, 1998).
23Id.
24Prior to terminating its delivery of CBS and Fox programming, PrimeTime 24 was required to
give each subscriber 45 days notice. Id.
25Note also that the scheduled sunsetting of SHVA on December 31, 1999 served as additional
motivation for congressional action.
26The 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.

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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
27See H.Rept. 106-479, § 1000(a)(9).
28Satellite 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).
29The 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.
30For 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.

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