A federal appeals court in Richmond, Va., is expected to rule by year-end on the satellite television industry’s challenge to must-carry requirements for dish TV providers.
The time frame for court action is critical because the carriage restrictions take effect Jan. 1.
Under rules crafted by Congress two years ago, satellite companies are required to offer every local television station in a market if they carry at least one station in that market.
If the court rules after Jan. 1, there could be disruptions to direct broadcast satellite service as providers drop or add local signals to comply with the order.
The 4th Circuit Court of Appeals has put the case on an expedited track so it can rule before next year, sources said.
Meanwhile, a three-judge panel of the court heard oral arguments Sept. 25 on the dish industry’s lawsuit seeking to overturn the regulations.
The plaintiffs-the Satellite Broadcasting and Communications Association, DirecTV and EchoStar-argued that must-carry violates their First Amendment right to use editorial discretion in deciding which TV stations to offer.
The defendants-the Justice Department, Federal Communications Commission, U.S. Copyright Office and intervenor National Association of Broadcasters-said there’s no infringement on the First Amendment, because dish systems are not being forced to carry any stations. Carry one, carry all enables all stations to have a voice in a market, thus preserving diversity of speech, they said.
Sources cautioned it is difficult to predict how any judge will rule based on his or her questions during oral argument. That aside, Blair Levin, telecom and media analyst for Legg Mason, saw the court as skeptical of the satellite industry position.
“Judges hearing oral arguments in the case [Sept. 25] appeared to be sympathetic to government and broadcast attorneys defending the provisions,” he wrote in a report sent to institutional investors.
Satellite sources disagreed, insisting the court was understanding of their industry’s concerns, with two of the judges noting that they themselves live in rural areas where many neighbors rely on satellite TV.
DBS companies say if must-carry is tossed out, they can provide more local stations to rural markets since they wouldn’t be forced to carry marginal or duplicative stations in major markets. Capacity constraints have limited their carriage options, they say.
“I don’t think that where the judges live is going to override their sense of First Amendment jurisprudence,” Mr. Levin said.
The losing side will have two options: ask the U.S. Supreme Court to take the case, or seek an en banc hearing before the 4th Circuit.
Meanwhile, as EchoStar fought mandatory signal carriage in court, it asked the FCC for authority to offer distant network signals in markets where broadcasters fail to transition to digital on time.
“If broadcasters won’t do it, we’ll do it,” said David Goodfriend, director of legal and business affairs at EchoStar. But to import distant network signals, the company would need the permission of local broadcasters, who oppose the idea because it means fewer eyeballs watching their stations.
EchoStar wants the FCC to condition DTV deadline waivers on DBS companies being granted authority to offer distant signals.
“Given the broadcast industry’s aggressive efforts to roll out digital television, the EchoStar proposal is ridiculous on its face,” said NAB spokesman Dennis Wharton.
Mr. Goodfriend said the proposal would not strain EchoStar’s channel capacity because the company could offer the same distant network signals-such as the major stations in Los Angeles-in dozens of markets.
On a related note, NAB raised concerns last week that EchoStar wants to aim one of its new spot beams at Mexico City-a huge market-while insisting it has limited capacity to offer local signals in the United States.
EchoStar said the spot beam, part of the Echo 7 satellite to be launched later this year, must be shined on Mexico City because it would cause interference with EchoStar if beamed into the United States. EchoStar 7 will offer satellite service to customers over vast regions, including Alaska, Hawaii, Texas and Puerto Rico.
The company doesn’t have a license to offer TV service in Mexico and said it has no intention of applying for one at the moment.