Nos. 01-1151(L) (CA-00-1571-A) Satellite Broadcasting, etc. v. Federal Communications Commission; United Statesof America

Filed: February 13, 2002
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 01-1151(L)
(CA-00-1571-A)
Satellite Broadcasting, etc.,
Petitioner,
versus
Federal Communications Commission, et al.,
Respondents.
O R D E R
The court further amends its opinion filed December 7, 2001,
and amended January 31, 2002, as follows:
On page 21, first paragraph, line 25 -- the reference to
“SBAC” is corrected to read “SBCA.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk

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Filed: January 31, 2002
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 01-1151(L)
(CA-00-1571-A)
Satellite Broadcasting, etc.,
Petitioner,
versus
Federal Communications Commission, et al.,
Respondents.
O R D E R
The court amends its opinion filed December 7, 2001, as
follows:
On page 22, second paragraph, line 17; page 30, first full
paragraph, lines 17 and 20; and page 30, footnote 7, line 3 -- the
references to “SBAC” are corrected to read “SBCA.”
On page 29, second full paragraph, line 8, and page 33, first
paragraph, line 18 -- the font at the end of the citations (the
last “C” in “FCC” and “PAC”) is corrected to Italic.
For the Court - By Direction
/s/ Patricia S. Connor
Clerk

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PUBLISHED PUBLISHED PUBLISHED PUBLISHED
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT
SATELLITE BROADCASTING AND
COMMUNICATIONS ASSOCIATION,
Petitioner,
v.
FEDERAL COMMUNICATIONS
COMMISSION; UNITED STATESOF
AMERICA,
Respondents, No. 01-1151
ASSOCIATION OF AMERICA'S PUBLIC
TELEVISION STATIONS; PUBLIC
BROADCASTING SERVICE; CORPORATION
FOR PUBLIC BROADCASTING; NATIONAL
ASSOCIATIONOF BROADCASTERS;
CONSUMER FEDERATIONOF AMERICA;
OFFICEOF COMMUNICATION, UNITED
CHURCHOF CHRIST, INCORPORATED,
Intervenors.

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ECHOSTAR SATELLITE CORPORATION,
Petitioner,
v.
FEDERAL COMMUNICATIONS
COMMISSION; UNITED STATESOF
AMERICA,
Respondents,
No. 01-1271
ASSOCIATION OF AMERICA'S PUBLIC
TELEVISION STATIONS; PUBLIC
BROADCASTING SERVICE; CORPORATION
FOR PUBLIC BROADCASTING; NATIONAL
ASSOCIATIONOF BROADCASTERS;
CONSUMER FEDERATIONOF AMERICA;
OFFICEOF COMMUNICATION, UNITED
CHURCHOF CHRIST, INCORPORATED,
Intervenors.
2

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NATIONAL ASSOCIATIONOF
BROADCASTERS,
Petitioner,
PAXSON COMMUNICATIONS
CORPORATION,
Intervenor,
v.
FEDERAL COMMUNICATIONS
COMMISSION; UNITED STATESOF No. 01-1272
AMERICA,
Respondents,
ASSOCIATION OF AMERICA'S PUBLIC
TELEVISION STATIONS; PUBLIC
BROADCASTING SERVICE; CORPORATION
FOR PUBLIC BROADCASTING;
CONSUMER FEDERATIONOF AMERICA;
OFFICEOF COMMUNICATION, UNITED
CHURCHOF CHRIST, INCORPORATED,
Intervenors.
On Petitions for Review of an Order of the
Federal Communications Commission.
(00-96, 99-363)
3

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SATELLITE BROADCASTING AND
COMMUNICATIONS ASSOCIATION;
COMMUNICATIONS CORPORATION; DISH,
LIMITED, d/b/a DISH Network;
DIRECTV ENTERPRISES, INCORPORATED;
DIRECTV OPERATIONS, INCORPORATED;
DIRECTV, INCORPORATED,
Plaintiffs-Appellants,
v.
FEDERAL COMMUNICATIONS
COMMISSION; WILLIAM E. KENNARD,
Chairman; SUSAN NESS, No. 01-1818
Commissioner, in her official
capacity; HAROLD FURCHTGOTT-ROTH;
MICHAEL K. POWELL, Commissioner,
in his official capacity; GLORIA
TRISTANI, Commissioner, in her
official capacity; UNITED STATES
COPYRIGHT OFFICE; LIBRARYOF
CONGRESS; JAMES H. BILLINGTON,
Librarian of Congress; MARY
PETERS, Register of Copyrights, in
her official capacity; UNITED
STATESOF AMERICA,
Defendants-Appellees,
4

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NATIONAL ASSOCIATION OF
BROADCASTERS; THE ASSOCIATIONOF
LOCAL TELEVISION STATIONS,
INCORPORATED; THE UNIVISION
NETWORK LIMITED PARTNERSHIPAND
UNIVISION TELEVISION STATIONS,
INCORPORATED; ASSOCIATIONOF
AMERICA'S PUBLIC TELEVISION
STATIONS; PUBLIC BROADCASTING
SERVICE; CORPORATIONFOR PUBLIC
BROADCASTING,
Intervenors/Defendants-Appellees.
PEGASUS COMMUNICATIONS
CORPORATION; CHANNEL MASTER
LLC,
Parties in Interest.
CONSUMER FEDERATIONOF AMERICA;
OFFICEOF COMMUNICATION, UNITED
CHURCHOF CHRIST, INCORPORATED,
Amici Curiae.
NATIONAL CABLE SATELLITE
CORPORATION (C-SPAN); SPACE
SYSTEMS/LORAL, INCORPORATED;
PAXSON COMMUNICATIONS
CORPORATION; NATIONAL
ALLIANCEFOR MEDIA ARTS &
CULTURE; ASSOCIATIONOF
INDEPENDENT VIDEOAND
FILMMAKERS; VIRGINIA CITIZENS
CONSUMER COUNCIL; CONEXANT
SYSTEMS, INCORPORATED; BROADCOM
CORPORATION,
Movants.
5

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Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Gerald Bruce Lee, District Judge.
(CA-00-1571-A)
Argued: September 25, 2001
Decided: December 7, 2001
Before WIDENER, NIEMEYER, and MICHAEL, Circuit Judges.
____________________________________________________________
Petitions for review denied and judgment affirmed by published opin-
ion. Judge Michael wrote the opinion, in which Judge Widener and
Judge Niemeyer joined.
____________________________________________________________
COUNSEL COUNSEL COUNSEL COUNSEL
ARGUED: ARGUED: ARGUED: ARGUED: Charles Justin Cooper, COOPER, CARVIN & ROSEN-
THAL, P.L.L.C., Washington, D.C., for Satellite, et al. Donald Bea-
ton Verilli, Jr., Nory Miller, JENNER & BLOCK, L.L.C.,
Washington, D.C., for NAB. Mark Bernard Stern, Appellate Staff,
Civil Division, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C.; Louis Emmanuel Peraertz, Special Counsel, FED-
ERAL COMMUNICATIONS COMMISSION, Washington, D.C., for
Federal Appellees. ON BRIEF: ON BRIEF: ON BRIEF: ON BRIEF: Michael W. Kirk, Victor J. Wolski,
COOPER, CARVIN & ROSENTHAL, P.L.L.C., Washington, D.C.;
Brian Koukoutchos, Mandeville, Louisiana; Charles G. Cole, Pantelis
Michalopoulos, Rhonda M. Rivens Bolton, STEPTOE & JOHNSON,
L.L.P., Washington, D.C., for Satellite, et al. Henry L. Baumann,
Benjamin F.P. Ivins, NATIONAL ASSOCIATION OF BROAD-
CASTERS, Washington, D.C.; Thomas P. Olson, WILMER, CUT-
LER & PICKERING, Washington, D.C., for NAB, et al. Stuart E.
Schiffer, Acting Assistant Attorney General, Jacob M. Lewis, Appel-
late Staff, Joseph W. Lobue, Hannah Stires, Federal Programs
Branch, Civil Division, UNITED STATES DEPARTMENT OF JUS-
TICE, Washington, D.C.; Jane A. Mago, General Counsel, Daniel M.
6

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Armstrong, Associate General Counsel, FEDERAL COMMUNICA-
TIONS COMMISSION, Washington, D.C., for Federal Appellees.
Robert A. Long, Jr., Mark H. Lynch, David L. Franklin, COVING-
TON & BURLING, Washington, D.C.; Marilyn Mohrman-Gillis,
Vice-President, Policy and Legal Affairs, Lonna Thompson, Director
of Legal Affairs, Andrew D. Cotlar, Staff Attorney, ASSOCIATION
OF AMERICA'S PUBLIC TELEVISION STATIONS, Washington,
D.C.; Kathleen Cox, Senior Vice President Policy, General Counsel
and Corporate Secretary, Robert M. Winteringham, Senior Staff
Attorney, CORPORATION FOR PUBLIC BROADCASTING,
Washington, D.C.; Gregory Ferenbach, Senior Vice President and
General Counsel, Paul Grego, Vice President and Deputy General
Counsel, PUBLIC BROADCASTING SERVICE, Alexandria, Vir-
ginia, for Intervenors Public Television Stations, et al. Harold Feld,
Andrew Jay Schwartzman, Cheryl A. Leanza, MEDIA ACCESS
PROJECT, Washington, D.C., for Intervenors Consumer Federation,
et al. Craig C. Reilly, RICHARDS, MCGETTIGAN, REILLY &
WEST, P.C., Alexandria, Virginia, for Intervenor Paxson.
____________________________________________________________
OPINION OPINION OPINION OPINION
MICHAEL, Circuit Judge:
Direct broadcast satellite (DBS) service has recently joined cable
and broadcast television as a major force in the market for delivering
television programming to consumers. In these consolidated cases,
representatives of the satellite industry raise various constitutional
challenges to Congress's efforts to regulate competition in that market
through the Satellite Home Viewer Improvement Act of 1999
(SHVIA). Pub. L. No. 106-113, 113 Stat. 1501A-523. In addition,
petitioners from the broadcast industry argue that one provision (the
"a la carte rule") of the FCC's order implementing SHVIA must be
struck down as an unreasonable interpretation of the statute. 1111 By
____________________________________________________________
1111 The parties in these cases fall into three groups, according to their
interests regarding SHVIA: satellite industry representatives (or the "sat-
ellite carriers"), including the Satellite Broadcasting and Communica-
tions Association (SBCA), DirecTV, Inc., EchoStar Communications
7

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enacting SHVIA, Congress sought to promote competition between
the satellite and cable industries by creating a statutory copyright
license that allows satellite carriers to carry the signals of local broad-
cast television stations without obtaining authorization from the hold-
ers of copyrights in the individual programs aired by those stations.
The Act also imposes a "carry one, carry all" rule, which was
designed to "preserve free television for those not served by satellite
or cable and to promote widespread dissemination of information
from a multiplicity of sources." H.R. Conf. Rep. No. 106-464, at 101
(1999) (SHVIA Conference Report). The rule, which is scheduled to
take effect on January 1, 2002, will require satellite carriers that
choose to take advantage of the statutory copyright license by carry-
ing one broadcast station in a local market to carry all requesting sta-
tions within that market. We hold, as did the district court, that the
carry one, carry all rule does not violate either the First Amendment
or the other constitutional provisions cited by the satellite carriers. We
also hold that the FCC's a la carte rule, which allows satellite carriers
to offer local broadcast stations to their subscribers either individually
or as part of a single package, is not arbitrary, capricious, or contrary
to law.
See 5 U.S.C. § 706(2)(A).
I.
A.
Nearly all consumers receive their television programming through
one of three delivery systems: broadcast television, cable, or satellite.
Broadcast television stations transmit electromagnetic signals over the
air, and these signals can be captured by any receiving television
antenna within range. Twenty percent of American television house-
holds rely exclusively on broadcast stations for their television pro-
gramming. Viewers pay no fee to receive broadcast signals. Instead,
____________________________________________________________
Corp., and Dish, Ltd., a wholly owned subsidiary of EchoStar doing
business as DISH Network; broadcast representatives (or the "broadcast-
ers"), including the National Association of Broadcasters (NAB), Paxson
Communications Corp., and the Public Broadcasting Service (PBS); and
the United States, essentially the Federal Communications Commission
(FCC).
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broadcast stations are supported by advertisers who pay for air time
at rates determined by the audience sizes for particular programs. The
most popular broadcast stations are affiliated with one of the four
major television networks (ABC, CBS, NBC, and Fox). The major
network affiliates compete for viewers and advertisers with various
independent broadcasters, including independent commercial stations,
noncommercial stations, and affiliates of emerging networks (UPN,
WB, and PAX). 2222
The broadcasters' principal competitors in the television program-
ming delivery market are the cable and satellite industries. Cable and
satellite companies now serve around 80 percent of America's televi-
sion households. Unlike broadcasters, their primary source of revenue
is subscription fees. Cable television distributes its signals to sub-
scribers over a local network of wires. It has for many years been the
leading provider of television programming to American homes.
Roughly 67 percent of television households currently subscribe to
cable. Although cable subscribers must pay for the right to receive
cable signals, they receive better picture quality and a wider variety
of programming options than do television viewers who rely on
antennas. Today, 84 percent of cable systems offer their subscribers
at least 30 channels, including national non-broadcast channels (such
as ESPN, MTV, CNN, and The Weather Channel) and regional non-
broadcast channels (such as the New England Sports Channel). Cable
operators also retransmit the signals of local broadcast stations to their
subscribers.
Providers of DBS (direct broadcast satellite) service deliver televi-
sion programming by uplinking signals to satellites orbiting in space
and then beaming those signals to receiving dishes connected to sub-
scribers' television sets. In the 1980s satellite dishes were 6 to 10 feet
in diameter, and satellite carriers primarily served customers in rural
areas. During the 1990s satellite carriers such as EchoStar and
DirecTV developed much smaller dishes and began to compete with
cable for subscribers in urban and suburban areas. Today, satellite
____________________________________________________________
2222 For ease of reference, we will often describe the class of broadcast
stations that includes commercial independents, noncommercial stations,
and emerging network affiliates as "independent" broadcast stations.
9

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carriers provide service in each of the nation's 210 television markets
and serve about 13 percent of television households. 3333
Whereas cable systems deliver their signals to subscribers over
local wire networks, satellite is primarily a national service. The satel-
lites currently used by DBS providers occupy one of three positions
in the Earth's orbit (called full CONUS slots) that allow the satellites
to transmit a single beam covering the entire continental United
States. The beam from a full CONUS satellite contains multiple fre-
quencies, and compression technology enables multiple television
channels to be carried on each frequency. The FCC licenses the use
of 32 frequencies at each orbital slot; thus, there are 96 total frequen-
cies that satellite carriers can use to reach satellite subscribers across
the United States. Currently, 50 of these frequencies are licensed to
EchoStar and 46 to DirecTV. Using their current compression ratios,
EchoStar and DirecTV each have the ability to carry between 450 and
500 channels via full CONUS satellites. Every channel carried on
these satellites is beamed to the homes of all subscribers; however,
channels that individual subscribers do not pay to receive are blocked
by the use of software in the subscriber's home satellite equipment.
Like cable, satellite service is financed by subscription fees, and it
offers better picture quality and more viewing options than broadcast
television. Satellite carriers can provide their customers with more
national and regional non-broadcast channels than most cable sys-
tems; yet before SHVIA was passed, satellite carriers had difficulty
competing with cable for urban and suburban customers. The root
cause of this difficulty was plain. Cable systems, but not satellite car-
riers, provided their customers with access to the signals of local
broadcast stations. This competitive advantage was rooted not only in
technology but also in federal copyright law. Unlike satellite carriers,
____________________________________________________________
3333 Our figures about the market shares of broadcast television, cable, and
satellite are drawn from
In the Matter of: Annual Assessment of the Sta-
tus of Competition in the Market for the Delivery of Video Programming,
Seventh Annual Report, CS Docket No. 00-132, 2001 WL 12938 (2001)
(FCC Seventh Annual Report). The figures reflect industry data through
June 2000.
See id. at 106. The broadcasters contend that satellite service
has grown significantly since June 2000 and that satellite market share
now exceeds 15 percent of television households.
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cable operators have never been required to obtain copyright clear-
ances for the broadcast programming they retransmit to their sub-
scribers. To explain the origins of cable's competitive advantage over
satellite, we must briefly review the history that produced the current
legal regime governing the relationships among cable, broadcast tele-
vision, and satellite.
In 1965, long before cable became a major force in the television
programming delivery market, the FCC imposed "must-carry" rules
on cable systems requiring them to retransmit the signal of any
requesting broadcast station that was "significantly viewed" in its
local market.
See Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434,
1438-43 (D.C. Cir. 1985) (discussing the early history of cable regu-
lation). The FCC feared that cable might undermine free, local broad-
casting unless "local broadcasters were assured access to the whole of
their allocated audience."
Id. at 1441. Specifically, the must-carry
rules were designed to aid newer UHF stations, which lacked the sig-
nal quality enjoyed by more established VHF stations. The FCC was
concerned that in the absence of carriage obligations cable systems
would carry only VHF stations and that non-carried UHF stations
would be placed at a competitive disadvantage in the race for adver-
tising dollars.
See id.
Copyright law had little effect on cable until Congress passed the
Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541, which pro-
vides that owners of copyrights in audiovisual works such as televi-
sion programs have the exclusive right to authorize public
performances of those works. 17 U.S.C. § 106(4). Although the
Copyright Act of 1909 had granted copyright holders a similar right
to control public performances of copyrighted works, cable operators'
secondary transmissions of broadcast programs were not regarded as
additional performances of those programs under the 1909 Act and
thus did not infringe upon the intellectual property rights of the pro-
gram copyright holders.
See Fortnightly Corp. v. United Artists Tele-
vision, Inc., 392 U.S. 390, 400-01 (1968). The 1976 Act's legislative
history reveals that Congress intended to countermand the result in
Fortnightly by designating cable's secondary transmissions of broad-
cast programs as public performances of those programs: "a cable
television system is performing when it retransmits the broadcast [of
a television program] to its subscribers." H.R. Rep. No. 94-1476, at
11

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63 (1976),
reprinted in 1976 U.S.C.C.A.N. 5659, 5677. As a result,
copyright law now generally requires parties seeking to retransmit the
signal of a broadcast television station to obtain authorization from
those holding copyrights in each of the programs broadcast by that
station. Cable operators, however, have never been subject to this
general rule. Congress found "that it would be impractical and unduly
burdensome to require every cable system to negotiate with every
copyright owner whose work was retransmitted by a cable system."
Id. at 89, 1976 U.S.C.C.A.N. at 5704. As a result, the 1976 Copyright
Act granted cable operators a statutory license that allows them to
retransmit broadcast television signals without securing authorization
from program copyright holders.
See 17 U.S.C. § 111(c).
As cable grew in popularity, cable operators and cable program-
mers began to chafe at the FCC's must-carry rules. Eventually, cable
interests challenged the rules as an unconstitutional burden on free-
dom of speech, and the rules were struck down by the D.C. Circuit
in 1985.
See Quincy Cable TV, 768 F.2d at 1463. The FCC moved
quickly to adopt a modified set of carriage rules, but the D.C. Circuit
again decided that the rules violated the First Amendment.
See Cen-
tury Communications Corp. v. FCC, 835 F.2d 292, 293 (D.C. Cir.
1987). After a period of several years during which cable enjoyed the
benefits of a statutory copyright license without the burdens of car-
riage obligations, Congress reimposed must-carry rules by passing the
Cable Television and Consumer Protection and Competition Act of
1992 (Cable Act). Pub. L. No. 102-385, 106 Stat. 1460. Like the
FCC's original must-carry rules, the Cable Act's must-carry rules
were designed to protect broadcast stations that might be refused car-
riage in the absence of a must-carry requirement.
The Cable Act must-carry rules were also challenged on First
Amendment grounds, but were ultimately upheld by the Supreme
Court in
Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622
(1994) (
Turner I), and
Turner Broadcasting System, Inc. v. FCC, 520
U.S. 180 (1997)(
Turner II). In
Turner I the Supreme Court held that
the must-carry rules were content-neutral restrictions on speech,
Tur-
ner I, 512 U.S. at 662, reviewable under the intermediate First
Amendment scrutiny standards established by
United States v.
O'Brien, 391 U.S. 367 (1968). The Court further recognized that the
interests served by the must-carry rules — preserving local broadcast
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television, promoting the "widespread dissemination of information
from a multiplicity of sources," and promoting fair competition in the
television programming market — were important "in the abstract."
Turner I, 512 U.S. at 662-63. However, the Court remanded the case
for further factual development on the question of whether these inter-
ests were genuinely advanced by the must-carry rules and whether the
rules were a narrowly tailored means of promoting these interests.
After the remand the Court held in
Turner II that the cable must-carry
rules fully satisfied the
O'Brien test. As a result, cable operators today
enjoy the privileges of a statutory copyright license but are also bound
by carriage obligations.
As the above history indicates, the cable industry developed within
a context of extensive FCC regulations, but it has been largely unaf-
fected by copyright considerations. Before 1976, cable retransmis-
sions of broadcast programs were not regarded as additional
performances of these programs and therefore did not infringe pro-
gram copyrights. Since 1976, cable has enjoyed a statutory copyright
license. In contrast, the satellite industry has until recently enjoyed
relative freedom from FCC oversight, but its history has been shaped
by a series of changes in federal copyright law. When the 1976 Copy-
right Act was passed, home satellite service did not exist, and the stat-
utory copyright license created by 17 U.S.C. § 111(c) was granted
only to cable systems. Although early satellite carriers lacked the
channel capacity to retransmit the signals of local broadcast stations
to the local audiences of those stations (called "local-into-local" ser-
vice), the carriers did have the capacity and the desire to offer their
subscribers some distant network signals. In other words, they had
enough capacity to carry the signals of network affiliates in a major
city (usually New York) throughout the entire country, but not
enough capacity to carry local network affiliates in smaller cities. It
was unclear, however, whether satellite carriers' secondary transmis-
sions of the signals of network affiliates infringed the copyrights in
the various programs broadcast by those stations. Satellite carriers
argued that they might be eligible to use the § 111 copyright license
as "cable systems," 17 U.S.C. § 111(c), or that their secondary trans-
missions of broadcast signals were noninfringing under the exemption
for passive carriers in 17 U.S.C. § 111(a)(3). Still, they asked Con-
gress to resolve the uncertainties about their copyright liability by
passing new legislation.
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Congress responded with the Satellite Home Viewer Act of 1988.
Pub. L. No. 100-667, 102 Stat. 3949. Recognizing that the high trans-
action costs involved in clearing the rights to network signals might
impede the growth of the fledgling satellite industry, Congress gave
carriers a limited copyright license to retransmit the signals of distant
network broadcast stations to unserved households that were unable
to receive an adequate over-the-air signal through a conventional
rooftop antenna. 17 U.S.C. § 119(a)(2)(B) (1994),
amended by
§ 119(a)(2)(B) (Supp. V 1999). "Unserved households" were defined
in part as those located outside a station's "Grade B contour," as
defined by FCC regulations.
Id. § 119(d)(10) (1994),
amended by
§ 119(d)(10) (Supp. V 1999). Congress limited the copyright license
to retransmissions to unserved households in order to respect the
terms of network-affiliate contracts, which grant local affiliates the
exclusive right to broadcast their networks' programming in their
local markets. Congress reasoned that local affiliates would lose the
benefits of their bargained-for exclusivity rights if satellite carriers
were allowed to import distant network signals into the affiliates'
local markets. The limited license created by the 1988 Act spurred the
growth of satellite carriers and expanded the viewing options of
unserved households, though it did little to help satellite effectively
compete with cable in urban and suburban areas where viewers could
already receive high quality broadcast signals.
In the late 1990s two problems led Congress to revisit its work in
the Satellite Home Viewer Act of 1988. First, cable continued to
enjoy a virtual monopoly in subscription television services in metro-
politan areas, and as a result cable subscribers were paying too much
for those services.
See S. Rep. No. 106-51, at 1-2 (1999). Second, the
1988 Act failed to deal adequately with the problems of satellite sub-
scribers who lived within the Grade B contours of network television
stations. Although these subscribers were ineligible to receive distant
network signals under the 1988 Act's limited copyright licence, many
of them were unable to receive satisfactory over-the-air signals from
their local network affiliates and thus remained without any meaning-
ful access to network programming.
See id. at 3-6. In addition, admin-
istrative difficulties in deciding which households were genuinely
unserved led to increasingly bitter disputes between satellite carriers
and broadcasters, leaving bewildered, angry consumers stuck in the
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middle.
See, e.g.,
ABC, Inc. v. Primetime 24, 17 F.Supp.2d 478
(M.D.N.C. 1998),
aff'd, 184 F.3d 348 (4th Cir. 1999).
Progress in satellite technology seemed to hold out a solution to
both of these problems. Satellite carriers had developed the channel
capacity to offer local-into-local service to their subscribers in some
markets. Congress recognized that satellite carriers that could offer
viewers access to their local broadcast stations could compete effec-
tively with cable and drive down the price of subscription television
services.
See H.R. Rep. No. 106-79, pt. 1, at 14 (1999). In addition,
Congress understood that the difficulties in deciding which house-
holds were sufficiently unserved to receive distant network signals
would be irrelevant if satellite subscribers could watch their local net-
work affiliates.
See id.
In 1997 and 1998 Congress conducted extensive hearings on the
possibility of extending the satellite carriers' statutory copyright
license to include local-into-local retransmissions. Representatives
from the various industries had ample opportunities to state their
views. Satellite industry representatives argued that without a statu-
tory copyright license, the high transaction costs of obtaining the
rights to retransmit broadcast programs would effectively prevent sat-
ellite carriers from offering local-into-local service. The satellite rep-
resentatives further explained that their inability to carry local
broadcast stations placed them at a competitive disadvantage to cable
because viewers want to be able to receive all of the television chan-
nels they watch from a single source: "most people who walk into a
satellite dealer's showroom turn around and walk out because they
can't get their local TV channels through DBS."
Reauthorization of
the Satellite Home Viewer Act: Hearing Before the Subcommittee on
Telecommunications, Trade, and Consumer Protection of the House
Committee on Commerce, 106th Cong. 73 (1999) (1999 House Hear-
ing) (statement of David Moskowitz, an EchoStar executive). The
cable representatives stressed the need for regulatory parity, arguing
that if satellite carriers were granted a statutory license comparable to
that enjoyed by cable, they should also be subject to the must-carry
rules and other regulatory constraints imposed on cable.
See The
Copyright Office Report on Compulsory Licensing of Broadcast Sig-
nals: Hearing Before the Senate Committee on the Judiciary, 105th
Cong. 50 (1997) (statement of Decker Anstrom, President, National
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Cable Television Association). Finally, representatives of the broad-
cast industry emphasized that mandatory carriage rules were needed
to ensure that satellite local-into-local service would not undermine
Congress's interest in preserving a vibrant system of free, local broad-
cast television. They explained that without carriage rules satellite
carriers would choose to retransmit only the signals of major network
affiliates in most markets and that competing stations in those markets
would suffer from the loss of access to a significant (and growing)
part of their potential audiences:
No rational doubt may exist that a local station denied
access to a portion of its inmarket audience is injured. Lack
of carriage reduces potential audience and, therefore, actual
audience. Reduced audiences translate to reduced revenue.
Even where revenue reductions are less than fatal, they still
affect a station's ability to provide the best practicable ser-
vice to the public. At best, a local station which a satellite
carrier refuses to carry would be placed at a demonstrable
disadvantage vis-a-vis competing broadcast television sta-
tions which are carried.
Copyright Licensing Regimes Covering Retransmission of Broadcast
Signals (Part II): Hearing Before the Subcommittee on Courts and
Intellectual Property of the House Committee on the Judiciary, 105th
Cong. 68 n.38 (1998) (1998 House Hearing) (statement of James J.
Popham, Vice President and General Counsel, Association of Local
Television Stations).
Congress sought to balance all of these concerns when it enacted
SHVIA on November 29, 1999. The Conference Report explained
that the legislation was designed to promote competition between sat-
ellite and cable while "preserv[ing] free television for those not
served by satellite or cable systems." SHVIA Conf. Rep. at 101. Two
interrelated provisions form the heart of SHVIA. The first provision,
codified at 17 U.S.C. § 122, amended the Copyright Act to create a
statutory copyright license for satellite carriers similar to that enjoyed
by cable operators. The license enables satellite carriers to make sec-
ondary transmissions of a broadcast station's signal into that station's
local market without obtaining the authorization of those holding
copyrights in the individual programs broadcast by that station. 17
16

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U.S.C. § 122(a). Satellite carriers that make use of this license pay no
royalties to program copyright holders. The second provision, codi-
fied at 47 U.S.C. § 338, amended the Communications Act of 1934
by creating mandatory carriage rules, including the carry one, carry
all rule that is the focus of this litigation. 47 U.S.C. § 338(a)(1).
Since SHVIA's passage in late 1999 satellite carriers have enjoyed
the benefits of the § 122 license without the burdens of the carry one,
carry all rule. In order to phase in satellite carriage obligations, Con-
gress decided that the rule would not become effective until January
1, 2002.
Id. § 338(a)(3). As of that date the rule will require all satel-
lite carriers who use the § 122 license to make local-into-local retran-
smissions in a local broadcast market to "carry upon request the
signals of all television broadcast stations located within that local
market."
Id. § 338 (a)(1). In other words, the voluntary decision to
carry one local station in a market under the statutory copyright
license will trigger an obligation to carry all the requesting stations in
that market. 4444
Like the cable must-carry rules, SHVIA's carry one, carry all rule
was designed to preserve a rich mix of broadcast outlets for consum-
ers who do not (or cannot) pay for subscription television services.
SHVIA adopts much of the machinery of the cable rules. For exam-
ple, broadcast stations may seek carriage from satellite carriers
under either § 338's mandatory carriage requirements, 47 U.S.C.
§ 325(b)(1)(C), or under the Act's retransmission consent provision,
47 U.S.C. § 325(b)(1)(A), which allows broadcast stations to receive
compensation from satellite carriers in exchange for permission to
retransmit the broadcast stations' signals. In allowing broadcasters to
____________________________________________________________
4444 The obligations imposed by the carry one, carry all rule are more lim-
ited than the name implies. Satellite carriers are not required to carry
local commercial stations whose signals substantially duplicate those of
another station in the same market. 47 U.S.C. § 338(c)(1). In addition,
satellite carriers are not required to carry more than one affiliate of a
given network in any local market unless the market contains two affili-
ates of the same network that are licensed to serve communities in differ-
ent states.
Id. Finally, Congress instructed the FCC to issue regulations
limiting satellite carriers' obligations to carry multiple noncommercial
broadcast stations in the same market.
Id. § 338(c)(2).
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choose between retransmission consent and mandatory carriage, both
SHVIA's carry one, carry all rule and the cable must-carry rules rec-
ognize the practical realities of the television marketplace. Major net-
work affiliates have bargaining power and will be carried voluntarily
in most instances, so they will normally elect to proceed under the
retransmission consent provision.
See Turner II, 520 U.S. at 191
(explaining that the Cable Act's retransmission consent provision
reflects the "popularity and strength of some broadcasters"). In con-
trast, independent stations (affiliates of emerging networks, indepen-
dent commercial stations, and noncommercial stations) may need the
protection of must-carry rules and will normally elect mandatory car-
riage.
The primary difference between § 338 and the cable must-carry
rules is that § 338's obligations are conditioned upon the satellite car-
rier's voluntary choice to make use of the § 122 license in a particular
television market, but the cable must-carry rules are mandatory in all
markets. This difference reflects the technological dissimilarities
between cable and satellite. Cable systems are local, and nearly all
have enough channel capacity to carry all the broadcast stations in
their local market and still provide an attractive mix of national and
regional non-broadcast programming. The satellite carriers, in con-
trast, currently beam the same 450 to 500 channels throughout the
continental United States and thus could not comply with a rule
requiring them to retransmit the signals of each of the country's
roughly 1,600 local broadcast stations.
See 1999 House Hearing at 95
(statement of David Moskowitz). While Congress recognized that sat-
ellite technology continues to improve and that eventually an uncon-
ditional must-carry rule might be possible, it still had to decide how
to structure the satellite copyright license in the interim. 5555
____________________________________________________________
5555 Congress, for example, heard testimony from satellite executives out-
lining plans to develop spot beam satellites, which will have a much
smaller footprint (geographic area where the satellite's beam is received)
than the satellites currently orbiting in full CONUS slots.
See H.R. Rep.
No. 106-79, pt. 1, at 14 (1999);
Satellite/Cable Competition: An Exami-
nation of the EchoStar/MCI Deal. Hearing Before the Subcommittee on
Antitrust, Business Rights, and Competition of the Senate Committee on
the Judiciary, 106th Cong. 40-41 (1999) (1999 Senate Hearing) (state-
ment of Charles Ergen, CEO of EchoStar). These satellites will permit
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Although minor variations were possible, Congress had two basic
options. It could have decided to give satellite carriers a station-by-
station copyright license that could be used free of carriage obliga-
tions. Under such a license, satellite carriers could "cherry pick" the
stations they wanted in each local market. Congress predicted that in
practical terms a station-by-station license would result in satellite
carriers using their available local-into-local capacity to carry only the
major network affiliates in as many markets as possible, beginning
with the largest markets and working toward the smaller ones. The
other choice was to impose the carry one, carry all rule in order to
create a market-by-market copyright license. This kind of license
forces satellite carriers to expand their local-into-local service one
market at a time, beginning with the carriage of all requesting local
stations in the largest markets and expanding from there. In sum,
Congress either could have allowed satellite carriers to cherry pick by
retransmitting
some stations (the major network affiliates) in
many
markets, or it could have allowed satellite carriers to retransmit
all of
the stations in
some markets. While satellite carriers would have pre-
ferred (and now argue for) the first result, Congress chose the second
because it feared that cherry picking of major network affiliates
within local markets would make it more difficult for non-carried sta-
tions in those markets to reach their audiences:
Although the conferees expect that subscribers who receive
no broadcast signals at all from their satellite service may
install antennas or subscribe to cable service in addition to
satellite service, the Conference Committee is less sanguine
that subscribers who receive network signals and hundreds
of other programming choices from their satellite carrier
will undertake such trouble and expense to obtain over-the-
air signals from independent broadcast stations.
____________________________________________________________
carriers to reuse their allotted spectrum frequencies in different geo-
graphic areas and will thereby increase the channel capacity carriers can
use to offer local-into-local service. One reason why Congress decided
to delay implementation of § 338 until January 1, 2002, was to give sat-
ellite carriers time to develop this new technology.
See S. Rep. No. 106-
51, at 14 (1999).
19

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SHVIA Conf. Rep. at 102. Non-carried stations in cherry-picked mar-
kets would "face the same loss of viewership Congress previously
found with respect to cable noncarriage."
Id. at 101. Congress there-
fore concluded that the carry one, carry all rule would protect the abil-
ity of all local broadcasters to reach their audiences and thereby
"preserve free television for those not served by satellite or cable sys-
tems and . . . promote widespread dissemination of information from
a multiplicity of sources."
Id.
B.
As directed by Congress,
see 47 U.S.C. § 338(g), the FCC issued
a report and order implementing § 338's carriage requirements on
November 29, 2000.
In the Matter of: Implementation of the Satellite
Home Viewer Improvement Act of 1999: Broadcast Signal Carriage
Issues, Retransmission Consent Issues, CS Docket Nos. 00-96 and 99-
363 (2000) (SHVIA Order). The only aspect of the SHVIA Order at
issue here is the a la carte rule adopted in paragraph 99 of the order.
The FCC concluded in that paragraph that § 338(d) does not require
satellite carriers to sell all local television stations in a given market
as one package. Instead, the Commission ruled that carriers could
offer local stations "as a package or a la carte, at comparable rates."
SHVIA Order at ¶ 99. This language would arguably permit satellite
carriers to offer their subscribers a package including only the major
network affiliates while offering independent broadcast stations only
on an a la carte basis. However, in a subsequent order issued while
these cases were under consideration, the FCC clarified its a la carte
rule by stating that satellite carriers may not offer their subscribers a
package including some subset of the local stations in a market (for
example, the major network affiliates) while offering other local sta-
tions on an individual basis.
See In the Matter of: Implementation of
the Satellite Home Viewer Improvement Act of 1999: Broadcast Sig-
nal Carriage Issues, Order on Reconsideration, CS Docket No. 00-
96, at ¶ 48 (2001) (Reconsideration Order). In other words, the Com-
mission has now ruled that satellite carriers offering local-into-local
service may offer their subscribers only two options: subscribers may
buy the local stations of their choice a la carte at comparable prices,
or they may buy a package of all the local stations for a price less than
or equal to the cost of subscribing to all the stations individually (for
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example, 12 stations at one dollar each or all 12 for $12 or less).
See
id.
C.
The present SHVIA litigation began on September 20, 2000, when
SBCA, DirecTV, EchoStar, and DISH Network filed a complaint in
the United States District Court for the Eastern District of Virginia
alleging that SHVIA's carry one, carry all rule, 47 U.S.C. § 338(a)(1),
exceeds Congress's power under the Copyright Clause and violates
the First Amendment and the Due Process and Takings Clauses of the
Fifth Amendment. NAB and PBS intervened on the side of the FCC
in order to defend the statute. The satellite carriers moved for sum-
mary judgment, but the FCC and its supporting intervenors filed Rule
56(f) motions requesting discovery in order to respond to the satellite
carriers' motion. The district court granted their motions, and discov-
ery began. The FCC and its supporting intervenors then filed a Rule
12(b)(6) motion to dismiss and (ultimately) a cross-motion for sum-
mary judgment. After the parties had conducted extensive discovery
in support of their summary judgment motions, the district court
granted the FCC and its intervenors' motion to dismiss on June 19,
2001.
See Satellite Broad. & Communications Ass'n v. FCC, 146
F.Supp.2d 803, 809 (E.D. Va. 2001). The district court treated the
carry one, carry all rule as a content-neutral regulation of the satellite
carriers' speech and upheld the rule under intermediate First Amend-
ment scrutiny. In addition, the court rejected the satellite carriers'
arguments alleging violations of the Copyright Clause and the Fifth
Amendment. The satellite carriers appealed. That appeal has been
consolidated with three petitions for review of the FCC's SHVIA
Order. SBCA filed a petition for review of the SHVIA Order in this
circuit, and EchoStar filed a similar petition in the Tenth Circuit. Both
petitions advanced constitutional challenges to SHVIA similar to
those advanced by the satellite carriers in the Eastern District of Vir-
ginia. NAB filed a petition for review in the D.C. Circuit challenging
the FCC's a la carte rule as arbitrary, capricious, and not in accor-
dance with law.
See 5 U.S.C. § 706(2)(A). Paxson Communications
intervened in this last petition on the side of NAB. The three petitions
for review were consolidated and assigned to this circuit pursuant to
28 U.S.C. § 2112(a)(3).
21

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II.
A.
The parties devote the lion's share of their attention to the satellite
carriers' First Amendment challenge to the carry one, carry all rule
enacted in 47 U.S.C. § 338. Satellite carriers, like cable operators,
function primarily as conduits for the speech of others. They transmit
programming from a variety of sources (national and regional non-
broadcast channels, superstations, and local broadcast stations) to
their subscribers "on a continuous and unedited basis."
Turner I, 512
U.S. at 629. Yet both satellite carriers and cable operators engage in
speech protected by the First Amendment when they exercise edito-
rial discretion over the menu of channels they offer to their subscrib-
ers.
See id. at 636-37. Insofar as the carry one, carry all rule seeks to
influence the exercise of that discretion, it is open to challenge under
the First Amendment.
It is important to be clear at the outset, however, that some of the
speech interests present in the
Turner cases are absent here. The cable
must-carry rules burdened the speech of cable programmers who had
to be dropped from some cable systems in order to make room for
local broadcast stations.
See id. at 675 (O'Connor, J., dissenting). To
the extent the First Amendment guarantees viewers and listeners the
right to receive information,
see Bd. of Educ. Island Trees Union Free
School Dist. v. Pico, 457 U.S. 853, 867 (1982) (plurality opinion);
Red Lion Broad. Co. v. FCC, 395 U.S. 367, 390 (1969), that right was
also burdened by the cable must-carry rules because the voices of
dropped cable programmers were effectively lost to entire communi-
ties. Here, however, the satellite carriers do not claim that the carry
one, carry all rule will force them to drop national or regional non-
broadcast programmers in order to carry more local broadcasters.
They claim only that they will have to carry independent broadcast
stations in larger markets at the expense of major network affiliates
in smaller markets.
See Brief for Petitioners SBCA and EchoStar at
26-27, 35 n.13. While those major network affiliates would no doubt
prefer to be carried on satellite services, the carry one, carry all rule
does not deprive those affiliates of the ability to reach their audiences.
In fact, they will be in exactly the same position under the carry one,
carry all rule that they would have occupied if SHVIA had never been
22

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passed. Nor will any voices be completely lost to communities as a
result of the carry one, carry all rule. The rule's only negative effect
on viewers will be that the major network affiliates in some markets
will be available to local viewers through only two mediums (broad-
cast and cable) rather than three. In sum, the carry one, carry all rule
burdens speech only to the extent that it affects satellite carriers' deci-
sions about how to allocate their capacity for offering local-into-local
service by inducing them to carry a different set of local broadcasters
than the carriers would have preferred.
In considering the satellite carriers' First Amendment challenge,
our first task is to determine the appropriate standard of review.
Tur-
ner I provides the starting point. In that case the Supreme Court held
that the cable must-carry rules were content-neutral restrictions on
speech and were therefore not subject to strict scrutiny.
See Turner I,
512 U.S. at 662. Here, the satellite carriers repeat many of the same
arguments for strict scrutiny that were examined and rejected in
Tur-
ner I. Although the satellite carriers labor mightily to distinguish that
case, their effort ultimately fails.
The Supreme Court has said that the "`principal inquiry in deter-
mining content neutrality . . . is whether the government has adopted
a regulation of speech because of [agreement or] disagreement with
the message it conveys.'"
Id. at 642 (quoting
Ward v. Rock Against
Racism, 491 U.S. 781, 791 (1989)). This inquiry involves two steps.
"First, we must examine the plain terms of the regulation to see
whether, on its face, the regulation confers benefits or imposes bur-
dens based upon the content of the speech it regulates."
Chesapeake
and Potomac Tel. Co. of Va. v. United States, 42 F.3d 181, 193 (4th
Cir. 1994),
vacated on other grounds, 516 U.S. 415 (1996). If it does
not, we then ask whether the regulation's "`manifest purpose is to reg-
ulate speech because of the message it conveys.'"
Id. (quoting
Turner
I, 512 U.S. at 645).
The text of § 338(a)(1) provides:
[E]ach satellite carrier providing, under section 122 of Title
17, secondary transmissions to subscribers located within
the local market of a television broadcast station of a pri-
mary transmission made by that station shall carry upon
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request the signals of all television broadcast stations
located within that local market.
47 U.S.C. § 338(a)(1). On its face, the rule confers benefits on a
content-neutral basis because satellite carriers must carry
all request-
ing local broadcast stations regardless of the content of their program-
ming.
Cf. Turner I, 512 U.S. at 645 ("The [must-carry] rules benefit
all full power broadcasters who request carriage — be they commer-
cial or noncommercial, independent or network affiliated, English or
Spanish language, religious or secular."). The satellite carriers argue,
however, that the carry one, carry all rule is content-based on its face
because its burdens are triggered by a satellite carrier's decision to
transmit certain content, namely, the signal of a local television sta-
tion.
We disagree. SHVIA's carriage obligations are not triggered
sim-
ply by the decision to carry a local broadcast station in a given mar-
ket. Instead, they are triggered by the decision to carry that station
by
making use of the § 122 license. A satellite carrier that privately nego-
tiates the required copyright clearances can retransmit the signal of a
local broadcast station without incurring any carriage obligations, but
a carrier that retransmits the same signal by means of the statutory
copyright license must comply with the carry one, carry all rule. Thus,
the burdens of the rule do not depend on a satellite carrier's choice
of content, but on its decision to transmit that content by using one
set of economic arrangements rather than another. Accordingly, we
hold that the carry one, carry all rule is content neutral on its face.
Next, we must decide whether the carry one, carry all rule is
content-based in its purpose. The satellite carriers claim that the rule
has a content-based purpose because it seeks to promote the survival
of independent broadcast stations, including affiliates of emerging
networks, commercial independent stations, and public broadcasting
stations. In support of this claim they cite language from the Confer-
ence Report indicating that Congress was concerned that satellite car-
riers would choose to carry only affiliates of the major networks and
that other local broadcasters would be cut off from portions of their
potential viewing audiences.
See SHVIA Conf. Rep. at 102. In addi-
tion, the satellite carriers rely on legislative history suggesting that
Congress sought to protect local broadcast stations because those sta-
24

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tions provide valuable news and public affairs programming to their
communities.
See id. at 92.
Again, we conclude that these points do not distinguish the present
case from
Turner I. Both Congress and the Supreme Court understood
perfectly well that the cable must-carry rules primarily benefitted
independent broadcast stations.
See Turner I, 512 U.S. at 672-73 (Ste-
vens, J., concurring in part and concurring in the judgment);
Turner
II, 520 U.S. at 191-92. Similarly, the statutory findings included in the
Cable Act described broadcast television as "an important source of
local news and public affairs programming, and other local broadcast
services critical to an informed electorate," Cable Act § 2(a)(11), 106
Stat. at 1461, and stated that noncommercial television "provides edu-
cational and informational programming to the Nation's citizens,"
id.
§ 2(a)(8)(A), 106 Stat. at 1461. Nevertheless, the Court determined
that neither must-carry's benefits to independent broadcast stations
nor Congress's recognition of the distinctive value of local program-
ming revealed a content-based purpose. Instead, the Court concluded,
"Congress' overriding objective in enacting must-carry was not to
favor programming of a particular subject matter, viewpoint, or for-
mat, but rather to preserve access to free television programming for
the 40 percent of Americans without cable."
Turner I, 512 U.S. at
646. According to the Court, Congress's findings did not show a
content-based preference for broadcast television over cable televi-
sion; they merely indicated that local broadcast television was intrin-
sically valuable and therefore worth preserving.
Id. at 648. In sum,
Turner I held that the cable must-carry rules were content neutral in
purpose even though the rules were meant to protect independent
broadcast stations and even though Congress recognized that those
stations provided valuable local programming. Here, the satellite car-
riers do no more than point to legislative history indicating that Con-
gress had the same purpose in enacting SHVIA and that Congress
continued to appreciate the distinctive value of local broadcast pro-
gramming. This is not enough to establish that SHVIA has a content-
based purpose.
We conclude, then, that the carry one, carry all rule should not be
subject to strict scrutiny. At most, it is a content-neutral measure that
imposes incidental burdens on speech and is therefore subject to inter-
mediate First Amendment scrutiny under
United States v. O'Brien,
25

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391 U.S. 367 (1968). Because, as we explain below, the carry one,
carry all rule passes constitutional muster under
O'Brien, we need not
address the FCC and its intervenors' argument that the rule should be
evaluated under a more lenient standard. 6666
B.
O'Brien directs us to uphold a content-neutral regulation of speech
if "it furthers an important or substantial governmental interest; if the
governmental interest is unrelated to the suppression of free expres-
sion; and if the incidental restriction on alleged First Amendment
freedoms is no greater than is essential to the furtherance of that inter-
est."
O'Brien, 391 U.S. at 377. Deciding whether an interest is impor-
tant or substantial and whether that interest is unrelated to the
suppression of free expression is usually simple enough, but this is
only the beginning of the inquiry. As the
Turner cases explain, the
O'Brien standard gets its bite from a two-part analysis. First, we must
determine whether the regulation materially advances an important or
substantial interest by redressing past harms or preventing future
ones. These harms must be "real, not merely conjectural," and the reg-
ulation must "alleviate these harms in a direct and material way."
Tur-
ner I, 512 U.S. at 664. If a regulation places even incidental burdens
on speech without yielding some genuine benefit, it must be struck
down. In making these evaluations, we must "accord substantial def-
erence to the predictive judgments of Congress."
Id. at 666. Our "sole
obligation is to assure that, in formulating its judgments, Congress has
____________________________________________________________
6666 The FCC and the broadcasters argue that because § 338's carriage
obligations are triggered by a satellite carrier's voluntary decision to
make use of the § 122 license, the carry one, carry all rule does not
impose a
burden on speech at all and should therefore be subject only to
rational basis review. They point out that SHVIA grants satellite carriers
a valuable benefit (the statutory copyright license) and places conditions
on the use of that benefit, but does not deprive the carriers of any rights
they possessed before SHVIA was enacted. Accordingly, the FCC and
the broadcasters contend that SHVIA's statutory copyright license should
be seen as a targeted government subsidy by analogy to
Rust v. Sullivan,
500 U.S. 173 (1991), and similar cases. As noted above, we find it
unnecessary to address this argument because we conclude that the carry
one, carry all rule is consistent with the First Amendment even if it is
treated as a content-neutral burden on satellite carriers' speech.
26

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drawn reasonable inferences based on substantial evidence."
Turner
II, 520 U.S. at 195 (internal quotation marks and citation omitted). If
the regulation materially advances some important or substantial
interest, we then proceed to the second part of the
O'Brien analysis
and ask whether the regulation is narrowly tailored to serve that inter-
est. The
O'Brien narrow tailoring requirement is less rigorous than
that applied under strict scrutiny. The requirement is met "so long as
the regulation promotes a substantial government interest that would
be achieved less effectively absent the regulation."
Ward, 491 U.S. at
799 (internal quotation marks and citation omitted). In other words,
the regulation must not "burden substantially more speech than is nec-
essary to further the government's legitimate interests."
Id.
In sum, the carry one, carry all rule satisfies the
O'Brien standard
if the rule materially advances at least one substantial government
interest in a narrowly tailored manner. The satellite carriers claim that
the rule is simply a way to promote the interests of some speakers
(independent broadcasters in large markets) at the expense of others
(major network affiliates in small and medium-sized markets). Pre-
dictably, they contend that this interest is not even legitimate, let
alone substantial or important. We agree that the carry one, carry all
rule is meant to preserve the ability of independent broadcasters to
reach their local audiences, but Congress did not view that goal as an
end in itself. Instead, Congress recognized that protecting independent
broadcasters from the harmful effects of satellite cherry picking
would further two substantial government interests. The first is the
government's interest in preserving a multiplicity of local broadcast
outlets for over-the-air viewers, those who do not subscribe to satel-
lite or cable service. The second is the government's interest in pre-
venting its grant of a statutory copyright license to satellite carriers
from undermining competition in local markets for broadcast televi-
sion advertising. Though these two interests are closely related
because both would be threatened in the same manner without the
carry one, carry all rule, they are distinct because the first involves
harms to over-the-air viewers while the second involves harms to
local advertisers and to independent broadcasters themselves. As we
explain next in the first part of our
O'Brien analysis, we find that both
interests are materially advanced by the carry one, carry all rule. We
will now address each interest in turn.
27

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1.
Congress enacted the carry one, carry all rule to "preserve free tele-
vision for those not served by satellite or cable systems and to pro-
mote widespread dissemination of information from a multiplicity of
sources." SHVIA Conf. Rep. at 101. These interests are clearly sub-
stantial and unrelated to the suppression of free expression.
See Tur-
ner I, 512 U.S. at 662-63 (stating that the government's interests in
"preserving the benefits of free, over-the-air local broadcast televi-
sion" and "promoting the widespread dissemination of information
from a multiplicity of sources" were both important and unrelated to
the suppression of free expression). In deciding whether § 338 materi-
ally advances these two interests, it is useful to characterize them
more precisely. We therefore adopt the characterization suggested in
Turner II, where the Supreme Court treated the two interests as a uni-
fied whole: "Congress has an independent interest in preserving a
multiplicity of broadcasters to ensure that all households have access
to information and entertainment on an equal footing with those who
subscribe to cable."
Turner II, 520 U.S. at 194;
see also id. at 193
(stating that Congress's interest in "preserving the existing structure
of the broadcast industry discloses a purpose to prevent any signifi-
cant reduction in the multiplicity of broadcast programming sources
available to noncable households" (internal quotation marks and cita-
tion omitted));
id. at 226 (Breyer, J., concurring in part) (describing
the Cable Act's purpose as "provid[ing] over-the-air viewers who lack
cable with a rich mix of over-the-air programming" and "assur[ing]
the over-the-air public access to a multiplicity of information sources"
(internal quotation marks and citation omitted)). In short, the govern-
ment interests served by the carry one, carry all rule are best charac-
terized as a single interest in preserving a multiplicity of broadcast
outlets for over-the-air viewers.
This characterization accurately captures the concerns expressed by
Congress when it enacted § 338. In explaining that a market-by-
market license promotes both the interest in preserving broadcast tele-
vision for over-the-air viewers and the interest in promoting wide-
spread dissemination of information from multiple sources, Congress
expressed its concern that "absent must-carry obligations, satellite
carriers would carry the major network affiliates and few other sig-
nals. Non-carried stations would face the same loss of viewership
28

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Congress previously found with respect to cable noncarriage."
SHVIA Conf. Rep. at 101. In other words, Congress understood that
the threat to over-the-air viewers was not the loss of broadcasting as
a medium, but the loss of the independent stations needed to provide
those viewers with a rich mix of broadcast programming from multi-
ple sources.
The proper question, then, is whether the government's interest in
preserving a multiplicity of broadcast outlets for over-the-air viewers
is materially advanced by the carry one, carry all rule. The satellite
carriers appear to concede that the rule would effectively combat any
real threat to this interest, but the carriers argue that they do not pose
a real threat. Congress, however, concluded that satellite carriers
would threaten this interest in the near future if it gave them a statu-
tory copyright license without imposing carriage rules.
See SHVIA
Conf. Rep. at 101. Our review of that judgment has both factual and
legal aspects. We must decide whether Congress's factual predictions
about the consequences of enacting a station-by-station copyright
license were supported by substantial evidence in the legislative
record.
See Turner II, 520 U.S. at 195-96. We may also look to evi-
dence outside the legislative record in order to confirm the reason-
ableness of Congress's predictions.
See id. at 196, 204. In addition,
we must determine whether the predicted set of consequences is
legally sufficient to count as a real threat to the government's interest
in preserving a multiplicity of broadcast outlets for over-the-air view-
ers.
Congress made extensive statutory findings in enacting the Cable
Act.
See Cable Act § 2(a), 106 Stat. at 1460-63. SHVIA's legislative
record is less extensive, but this does not affect our duty to accord
substantial deference to Congress's predictive judgments. "Congress
is not obligated, when enacting its statutes, to make a record of the
type that an administrative agency or court does to accommodate judi-
cial review."
Turner I, 512 U.S. at 666;
see also Sable Communica-
tions of Cal., Inc. v. FCC, 492 U.S. 115, 133 (1989) (Scalia, J.,
concurring) ("Neither due process nor the First Amendment requires
legislation to be supported by committee reports, floor debates, or
even consideration, but only by a vote."). We can fairly conclude
from the legislative record that Congress made the following three
factual predictions: (1) that satellite carriers would soon capture a sig-
29

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nificant part of the television programming delivery market, (2) that
satellite carriers would continue to deny carriage to significant num-
bers of independent stations in markets where they chose to offer
local-into-local service, and (3) that non-carried stations in those mar-
kets would be harmed by losing access to parts of their potential audi-
ences. In sum, Congress predicted that if satellite carriers enjoyed a
statutory copyright license but were not bound by carriage rules, sig-
nificant numbers of independent broadcast stations would be harmed
by losing access to significant portions of their audiences. As we
explain below, each of Congress's predictions was supported by sub-
stantial evidence. The harder question is the essentially legal one of
whether the consequences Congress predicted constitute a real threat
to the government's interest in preserving a multiplicity of local
broadcast outlets for over-the-air viewers. We begin with the three
factual predictions, addressing them one by one.
Congress's prediction that satellite carriers would become a signifi-
cant force in the television programming delivery market was sup-
ported by substantial evidence. While Congress did not explicitly find
that satellite carriers would attain any specific level of market pene-
tration, it obviously projected that satellite carriers would attract
enough viewers to put downward pressure on cable rates. Congress
created the § 122 copyright license to produce this result,
see SHVIA
Conf. Rep. at 91-92; S. Rep. No. 106-51, at 1-3 (1999), and it cannot
be unreasonable for Congress to proceed on the premise that its own
legislation will be effective. Moreover, the rapid growth in satellite
service since SHVIA's enactment suggests that Congress's prediction
will soon come true. The number of DBS subscribers grew by 28 per-
cent between June 1999 and June 2000.
See FCC Seventh Annual
Report at ¶ 61. In comparison, cable subscriptions grew at an annual
rate of less than 1.5 percent.
See id. at¶ 65. DBS providers have attri-
buted much of their growth to the § 122 license.
See id. at ¶ 68;
see
also id. at ¶ 69 (stating that SBCA reported a 43 percent increase in
the number of new DBS subscribers per month in the 6 months fol-
lowing SHVIA's enactment). In its comments for the FCC's Seventh
Annual Report, SBCA predicted that DBS service might have as
many as 16 million subscribers (over 15 percent of American televi-
sion households) by the end of 2000. 7777
See id. at ¶ 65. In sum, Con-
gress's first prediction was entirely reasonable.
____________________________________________________________
7777 As noted above,
see supra note 3, the broadcasters contend that the
market share of DBS providers now exceeds the 15 percent share fore-
cast by SBCA in its comments for the FCC's Seventh Annual Report.
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Congress's second prediction was that without § 338, satellite car-
riers would refuse to carry significant numbers of independent broad-
cast stations in markets where they offered local-into-local service.
See SHVIA Conf. Rep. at 101. This prediction was supported by sub-
stantial evidence in the record before Congress.
See, e.g., 1999 Senate
Hearing at 10 (statement of Charles Ergen). In addition, the satellite
industry's track record under SHVIA has proven the prediction to be
accurate. As of November 5, 2001, DirecTV carried the four major
network affiliates in 41 markets (a total of 164 stations), but carried
a total of only 13 independent stations in those 41 markets.
See
www.skyreport.com/skyreport/local.htm. Similarly, EchoStar carried
the four major network affiliates in 35 markets (a total of 140 sta-
tions), but carried only 13 independent stations in those markets.
See
id. Thus, during SHVIA's phase-in period the satellite carriers have
confined their local-into-local offerings almost exclusively to major
network affiliates. Moreover, they have plainly announced their inten-
tion to continue cherry picking the major network affiliates so long
as they may lawfully do so. This preference for cherry picking will
not simply wither away because it is rooted in the national character
of existing satellite technology.
As we have said, satellite carriers currently beam the same signals
throughout the nation from satellites orbiting in full CONUS slots. As
a result, a carrier who chooses to retransmit the signal of an indepen-
dent commercial station in Boston beams that station's signal to sub-
scribers nationwide, but blocks out the signal at the homes of all
subscribers who do not live in the Boston area. As this example illus-
trates, local-into-local service is a relatively inefficient use of a carri-
er's finite channel capacity. National programming uses that capacity
more efficiently because it can be expected to draw more viewers
across the country as a whole than any local channel, even if the
national programming is less popular within individual local markets
than the programming of the independent broadcast stations in those
markets. As a result, satellite carriers have economic incentives to
favor national non-broadcast programming over local broadcast pro-
gramming. While improvements in satellite technology, such as the
deployment of spot beam satellites, may reduce the inefficiencies that
result from carrying local broadcast stations, these inefficiencies will
continue to exist to some degree so long as the beams from individual
satellites cover multiple television markets. Yet satellite carriers also
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recognize that their product is less attractive to subscribers if they fail
to carry the local affiliates of major networks because most people
watch these stations about "65 percent of the time" they spend watch-
ing television. 1999 Senate Hearing at 7 (statement of Charles Ergen).
Under these circumstances, the economically rational choice for satel-
lite carriers is to cherry pick the major network affiliates in markets
where the carriers offer local-into-local service. We conclude, then,
that both the satellite industry's track record and its economic incen-
tives provide substantial evidence supporting Congress's predictive
judgment that satellite carriers will deny carriage to significant num-
bers of independent broadcast stations if the carriers are not bound by
the carry one, carry all rule.
Congress's third prediction was that lack of satellite carriage would
harm independent broadcast stations.
See SHVIA Conf. Rep. at 101
(stating that "[n]on-carried stations would face the same loss of
viewership Congress previously found with respect to cable noncarri-
age"). This general prediction rested on the following series of more
specific predictions about the consequences of non-carriage. First, a
non-carried station will effectively lose access to satellite subscribers
if satellite carriers cherry pick the major network affiliates in its market. 8888
____________________________________________________________
8888 A non-carried station in a cherry-picked market loses access to satel-
lite subscribers in that market in the sense that those subscribers will be
significantly less likely to watch that station than would be the case if the
subscribers received either
all or
none of their local stations via satellite.
This proposition rests on two plausible and widely shared empirical
assumptions. The first assumption is that television viewers prefer to
receive all of their programming from one source. For subscribing house-
holds, satellite becomes the primary source of television programming,
and it follows that satellite subscribers will be less likely to watch non-
carried broadcast stations even if they have antennas that can capture a
clear signal from those stations. The second assumption is that satellite
subscribers who are able to receive local network signals via satellite will
be unlikely to obtain or maintain antennas in order to receive indepen-
dent local broadcast stations.
See SHVIA Conf. Rep. at 102. In contrast,
satellite subscribers who receive no network signals via satellite will
probably use antennas or subscribe to basic cable in order to have access
to network signals. This assumption explains why the carry one, carry all
rule benefits independent broadcast stations even in markets where satel-
lite carriers do not offer local-into-local service.
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Second, a station's loss of access to those subscribers will result in
lower ratings, which will in turn lead to lower advertising revenues.
Third, lower revenues will lead to a decrease in programming quality,
which will then further depress ratings and station revenues, all in a
vicious cycle. The record before Congress contains substantial evi-
dence to support these predictions.
See ante at 16 (statement of James
J. Popham);
Copyright Compulsory License Improvement Act: Hear-
ings on H.R. 768 Before the Subcommittee on Courts and Intellectual
Property of the House Committee on the Judiciary, 106th Cong. 47
(1999) (statement of John Hutchinson, CEO, Local Television on Sat-
ellite) (stating that "[s]atellite could effectively, like cable, become
the bottleneck which disenfranchises stations"). Further, the predic-
tions are essentially the same as those Congress made in passing the
Cable Act.
See Turner II, 520 U.S. at 208-09 (discussing testimony
from broadcasters that explained how cable non-carriage leads to
declines in ratings, advertising revenues, and program quality). As the
Supreme Court explained in
Nixon v. Shrink Missouri Government
PAC, 528 U.S. 377, 391 (2000), the "quantum of empirical evidence
needed to satisfy heightened judicial scrutiny of legislative judgments
will vary up or down with the novelty and plausibility of the justifica-
tion raised." Because the justifications here were both familiar and
plausible, Congress could reasonably conclude, at the very least, that
non-carried stations would suffer some degree of harm in the absence
of the carry one, carry all rule. The extent of that harm would depend,
of course, on how many potential viewers of non-carried stations
became satellite subscribers.
So far, we have established that Congress had substantial evidence
to support its overall prediction that in a world where satellite carriers
enjoyed the benefits of a statutory copyright license without the bur-
dens of the carry one, carry all rule, satellite carriers would become
significant competitors to cable and would continue to cherry pick
major network affiliates in markets where they offered local-into-
local service. In that world, non-carried stations in cherry-picked mar-
kets would lose access to significant parts of their local audiences.
Again, the harder question is whether this predicted set of conse-
quences is enough to justify imposing the carry one, carry all rule on
satellite carriers in order to protect the government's interest in pre-
serving a multiplicity of broadcast outlets for over-the-air viewers. In
other words, the question is whether preventing the consequences
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Congress predicted counts as addressing a real threat to that interest
in a material way.
This is essentially a legal question, and the satellite carriers claim
that it has a clear answer. Relying on
Turner II, they argue that
imposing carriage rules on a particular television programming deliv-
ery medium is justified only when stations not carried by that medium
will "deteriorate to a substantial degree or fail altogether."
Turner II,
520 U.S. at 208. It is only at this point, they claim, that carriage deni-
als affect the interests of over-the-air viewers. The satellite carriers
contend that under
Turner II's substantial deterioration standard, the
carry one, carry all rule does not address a real threat because Con-
gress lacked substantial evidence to support the judgment that stations
denied access to (at most) 15 percent of their audiences would sub-
stantially deteriorate. The carriers remind us that when Congress
enacted the Cable Act in 1992, cable controlled 60 percent of the tele-
vision programming delivery market.
See Cable Act § 2(a)(3), 106
Stat. at 1460.
To the extent that the satellite carriers would have us decide this
case by looking at the difference between the 13 to 15 percent market
share of satellite carriers today and the 60 percent market share
enjoyed by cable in 1992, they oversimplify the issues. For one thing,
Turner II held only that Congress could reasonably conclude that a
broadcast station's loss of access to 60 percent of its market was
suffi-
cient to cause that station to substantially deteriorate. It left open the
possibility that Congress could reasonably conclude that some smaller
level of audience loss would significantly harm non-carried stations.
More fundamentally, however, we reject the satellite carriers' argu-
ment that substantial deterioration of non-carried broadcast stations is
always the proper standard for deciding when carriage rules are justi-
fied. The substantial deterioration standard does not work here
because that standard was formulated to address a situation where the
market for subscription television services was dominated by a single
medium.
When Congress passed the Cable Act of 1992, cable television was
the sole threat to the government's interest in preserving a multiplicity
of broadcast outlets for over-the-air viewers. The substantial deterio-
ration standard employed in
Turner II assumes the existence of a uni-
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tary threat by insisting that the government show that denial of
carriage on an individual medium would threaten the viability of inde-
pendent broadcasters.
See Turner II, 520 U.S. at 195. But the substan-
tial deterioration standard was not meant to address situations in
which the threat to broadcasters comes from competitors in multiple
mediums, and it yields implausible results when applied outside its
intended context. Suppose, for example, that five different television
delivery mediums each served 15 percent of television households,
together serving 75 percent of those households. If the standard
applied in these circumstances, it would mean that Congress could not
impose must-carry rules on any of the mediums because stations
denied carriage on any one medium would lose access to only 15 per-
cent of their audiences and therefore would not suffer substantial
deterioration. That cannot be the law.
In enacting SHVIA, Congress properly considered the effects of
satellite and cable together in deciding to protect over-the-air viewers
from any significant reduction in their viewing options. Cable and sat-
ellite together currently serve around 80 percent of America's televi-
sion households, with cable accounting for about 65 percent and
satellite about 15 percent. We have already explained that both ser-
vices pose the same kind of threat to broadcast stations because both
— by making selective carriage decisions — threaten to cut off inde-
pendent broadcast stations from parts of their audiences. Together,
cable and satellite would pose an overwhelming threat to independent
broadcasters if neither were bound by carriage rules. Congress evi-
dently reasoned that with increasing competition from satellite carri-
ers, the threat to independent broadcasters posed by cable would
become a threat jointly posed by cable and satellite. It therefore con-
cluded that it could regulate both contributors to that common threat:
"The [Conference Committee] expect[s] that, by January 1, 2002, sat-
ellite carriers' market share will have increased and that the Con-
gress'[s] interest in maintaining free over-the-air television will be
undermined if local broadcasters are prevented from reaching their
viewers
by either cable or satellite distribution systems." SHVIA
Conf. Rep. at 101 (emphasis added).
The satellite carriers contend that the carry one, carry all rule need-
lessly restricts their speech because it is not necessary to protect the
interests of over-the-air viewers. Again, they claim that those interests
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are not threatened because broadcasters denied satellite carriage will
not lose access to enough of their audiences to suffer substantial dete-
rioration. But if over-the-air viewers are currently safe, that only
reflects the fact that cable is
already bound by must-carry rules. In
other words, the satellite carriers' arguments boil down to the claim
that even if both cable and satellite jointly contribute to a common
threat to the government's interest in protecting a multiplicity of
broadcast outlets for over-the-air viewers, Congress may not impose
carriage rules on satellite carriers because their contribution to that
common threat is smaller and because cable is already regulated. The
First Amendment does not require this result. It is more sensible to
allow Congress the latitude to view the regulatory landscape as a
whole by considering the cumulative effects of cable and satellite
without making fine distinctions regarding their relative contributions
in creating those effects. Where multiple competitors jointly pose a
common threat with a common structure, the First Amendment per-
mits Congress to protect important government interests from that
threat by imposing reasonable content-neutral restrictions on every
competitor who significantly contributes to that threat.
Under this standard, Congress's factual predictions easily justify
the imposition of the carry one, carry all rule. Even if it is debatable
whether satellite's
current market share is sufficient to count as a sig-
nificant contribution to the common threat posed by cable and satel-
lite, Congress surely had a substantial basis for concluding that
satellite would soon become a significant challenger to cable in the
television programming delivery market. Accordingly, we hold that
Congress reasonably concluded that the carry one, carry all rule
addressed a real threat to the government's interest in preserving a
multiplicity of broadcast outlets for over-the-air viewers. That interest
therefore survives the first part of the
O'Brien inquiry: it is substan-
tial, and it is genuinely advanced by the carry one, carry all rule.
2.
The FCC argues that the carry one, carry all rule also materially
advances a second substantial government interest: the interest in pre-
venting SHVIA's grant of a statutory copyright license to satellite car-
riers from undermining competition in local markets for broadcast
television advertising. This interest is, as we have said, closely related
36

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to the interest in preserving a multiplicity of broadcast stations for
over-the-air viewers. Both interests are threatened when independent
broadcasters lose access to parts of their local audiences as a result
of cherry picking by satellite carriers. But although cherry picking
threatens both interests in the same way, the interests are nonetheless
distinct. The first interest is ultimately an interest in protecting over-
the-air television viewers. The second is an interest in protecting the
broadcasters themselves, as well as the advertisers who benefit from
vigorous competition among the broadcast stations in their local mar-
kets.
The satellite carriers attempt to portray the carry one, carry all rule
as a self-conscious government attempt to manipulate a previously
undistorted marketplace of ideas in order to prop up weak broadcast
stations. This portrayal misrepresents the realities of the television
market. When Congress considered SHVIA in 1999, that market was
already pervasively shaped by government policies: FCC licensing of
broadcasters, the cable must-carry rules, copyright law, and the statu-
tory licenses enjoyed by cable and (to a lesser extent) satellite are
only a few examples. Against that backdrop Congress explicitly
sought ways to improve the competitive position of satellite in rela-
tion to cable because it believed that cable rates were too high. Noth-
ing in the text of SHVIA or its legislative history indicates that
Congress thought broadcasters enjoyed any unfair advantages in rela-
tion to satellite or cable. Recognizing that satellite carriers needed a
statutory copyright license to be able to compete with cable, Congress
then considered the possible effects on independent broadcasters of
the decision to grant that license.
As we have explained above, the choice was between offering sat-
ellite carriers a station-by-station license and a market-by-market
license. Congress understood that allowing satellite carriers to offer
local-into-local service by cherry picking network affiliates would
deprive non-carried stations of access to significant (and growing)
parts of their audiences. We have already discussed at length the pos-
sibility that cherry picking would ultimately harm over-the-air view-
ers by reducing the quality or quantity of broadcast outlets available
for those viewers, but here we are concerned with the immediate
effects of selective carriage on local television advertising markets.
Local broadcasters and cable companies compete with one another in
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those markets, and their competitive positions are a function of their
ratings. Independent stations that lost access to even a small part of
their potential audiences would therefore be placed at a competitive
disadvantage compared to carried stations in their efforts to attract
local advertisers.
See 1998 House Hearing at 68 n.38 (statement of
James J. Popham). Congress heard testimony that a station-by-station
license would essentially enable satellite carriers to pick winners and
losers in local advertising markets, undermining the efforts of emerg-
ing television networks to compete with the established broadcast net-
works: "Nothing could more surely dull the cutting edge of
competition from new networks, their local affiliates, and innovative
independent stations in local markets."
Id. at 59. In short, Congress
had substantial evidence for the judgment that a station-by-station
copyright license would have boosted competition in one market (the
market for subscription television services) by hampering competition
in another market (the market for local broadcast advertising). Such
a license would have harmed both independent broadcasters and local
advertisers. By choosing a market-by-market license, Congress acted
to minimize the unintended, disruptive effects of its intervention in
the television marketplace.
This interest in preserving a level playing field in local broadcast
advertising markets seems to us at least as significant as many inter-
ests which the Supreme Court has found to be important or substan-
tial.
See, e.g.,
Clark v. Community for Creative Non Violence, 468
U.S. 288, 296 (1984) (holding that government had a substantial
interest in maintaining parks in Washington, D.C., in "an attractive
and intact condition");
Members of City Council v. Taxpayers for Vin-
cent, 466 U.S. 789, 807 (1984) (holding that city had a substantial
interest in preventing "the visual assault on the citizens of Los Ange-
les presented by an accumulation of signs posted on public property").
We therefore conclude that Congress's interest in minimizing the
unintended adverse effects of its legislation on local broadcast adver-
tising markets is substantial enough to justify incidental, content-
neutral restrictions on speech. The carry one, carry all rule advances
this interest in a material way because it preserves a level playing
field on which local broadcasters can compete for advertising revenue
by preventing satellite carriers from making selective carriage deci-
sions within local television markets. Accordingly, we hold that this
interest also satisfies the first part of the
O'Brien analysis.
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3.
We have identified two interests that pass scrutiny under the first
part of the
O'Brien analysis. The second part of the
O'Brien analysis
employed in
Turner II requires us to ask whether the carry one, carry
all rule is a narrowly tailored means of advancing these interests. The
government has considerable latitude under this test. It may "employ
the means of its choosing so long as the . . . regulation promotes a
substantial governmental interest that would be achieved less effec-
tively absent the regulation and does not burden substantially more
speech than is necessary to further that interest."
Turner II, 520 U.S.
at 213-14 (internal quotation marks and citation omitted). The parties
have devoted relatively little attention to this aspect of the
O'Brien
analysis, and with good reason. Congress enacted the carry one, carry
all rule to protect independent broadcast stations from the harm they
would suffer if satellite carriers denied them carriage while retran-
smitting the signals of the major network affiliates in their markets.
As we have explained, the rule genuinely advances two important
interests: the interest in preserving a multiplicity of local broadcast
outlets for those who do not subscribe to cable or satellite and the
interest in minimizing the unintended effects of SHVIA's statutory
copyright license on local broadcast advertising markets. The satellite
carriers concede that without the carry one, carry all rule, they would
have chosen to carry only major network affiliates in many local mar-
kets and would therefore have threatened independent broadcasters
with the very harms that Congress sought to prevent. Accordingly,
any legislation that created a statutory copyright license without
imposing some form of mandatory carriage requirement would have
been significantly less effective — indeed, it would have been com-
pletely ineffective — in advancing the government's interests. That
is sufficient to satisfy
O'Brien's narrow tailoring requirement. Fur-
ther, the particular form of carriage requirement imposed by SHVIA
is not an excessive burden on satellite carriers because it leaves them
with the choice of when and where they will become subject to the
carry one, carry all rule. As a result, we hold that the rule is a nar-
rowly tailored means of promoting the government's important ends
of preserving a vibrant mix of local broadcast outlets for over-the-air
viewers and minimizing the unintended side effects of SHVIA's stat-
utory copyright license on local broadcast advertising markets. The
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carry one, carry all rule is therefore consistent with the First Amend-
ment.
C.
We have reserved for separate consideration the satellite carriers'
argument that the carry one, carry all rule cannot be justified under
the reasoning of the
Turner cases because Congress had no evidence
that the rule was needed to prevent anticompetitive behavior by satel-
lite carriers. The satellite carriers claim that the cable must-carry rules
were designed to prevent anticompetitive behavior by cable operators
and that the Supreme Court upheld those rules only by virtue of their
relationship to that goal.
The satellite carriers are correct that Congress was concerned about
anticompetitive practices when it passed the Cable Act. Congress had
substantial evidence that cable operators had bottleneck monopoly
power over their subscribers' access to television signals and that
cable operators had substantial economic incentives to abuse that
power by denying carriage to local broadcast stations even when
those stations were more popular with cable subscribers than some of
the cable channels that replaced them. Congress found that the cable
industry competed with local broadcasters for advertising revenues
and that cable therefore had incentives to reduce the attractiveness of
broadcast stations to advertisers by refusing to carry those stations.
See Cable Act § 2(a)(14)-(15), 106 Stat. at 1462. Congress also found
that vertical integration in the cable industry (common ownership of
cable systems and cable programming sources) gave cable operators
reasons to favor cable programming over broadcast programming.
See
id. § 2(a)(5), 106 Stat. at 1460. Congress lacked similar evidence of
anticompetitive behavior by satellite carriers. While satellite carriers
also possess bottleneck power in the sense that they control the pri-
mary gateway through which television programming enters the
homes of their subscribers, Congress had no evidence that satellite
carriers would abuse that power by engaging in anticompetitive
behavior. Unlike cable companies, satellite carriers do not compete
with local broadcasters for advertising and they are not vertically inte-
grated with non-broadcast programming sources to any significant
degree.
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The satellite carriers argue that without evidence of unfair competi-
tion by satellite carriers, the carry one, carry all rule must be struck
down. The argument cannot be summarily rejected, for it is not imme-
diately clear whether or how the holdings in the
Turner cases depend
on evidence of anticompetitive practices in the cable industry.
Com-
pare Turner I, 512 at 661 (stating that the must-carry rules are "justi-
fied by special characteristics of the cable medium: the bottleneck
monopoly power exercised by cable operators and the dangers this
power poses to the viability of broadcast television")
with Turner II,
520 U.S. at 226 (Breyer, J., concurring in part) (providing the fifth
vote to uphold the must-carry rules without relying on the claim that
the rules "sensibly compensate for some significant market defect").
As we read the
Turner opinions, however, the theme of preserving
broadcast television is more fundamental than the theme of prevent-
ing unfair competition: "Federal policy . . . has long favored preserv-
ing a multiplicity of broadcast outlets regardless of whether the
conduct that threatens it is motivated by anticompetitive animus or
rises to the level of an antitrust violation. . . . Congress has an
inde-
pendent interest in preserving a multiplicity of broadcasters to ensure
that all households have access to information and entertainment on
an equal footing with those who subscribe to cable."
Turner II, 520
U.S. at 194 (emphasis added). This means that if satellite carriers
threaten the government's interest in preserving a multiplicity of local
broadcast outlets, it does not matter whether the threat can be traced
to anticompetitive practices by those carriers. Our reading gains fur-
ther support from the fact that in
Turner II the Court discussed evi-
dence of unfair competition primarily to establish that cable operators
would in fact deny carriage to substantial numbers of broadcast sta-
tions without the must-carry rules.
See id. at 197-208. In other words,
the discussion of anticompetitive behavior in
Turner II sought not to
explain the nature of the interest promoted by the must-carry rules,
but to explain why the threat that cable posed to broadcast television
and its viewers was real rather than conjectural.
Satellite carriers do not deny carriage to independent broadcasters
for anticompetitive reasons. As we have explained, they do so
because the national character of satellite delivery systems provides
economic incentives to favor national, non-broadcast programming
over local, broadcast programming. There is nothing anticompetitive
about satellite carriers' efforts to make the most efficient use of their
41

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existing channel capacity. In contrast, Congress found that in the
absence of must-carry, cable operators would likely deny carriage to
many independent broadcast stations for anticompetitive reasons,
such as the desire to undercut a competitor in the market for local
advertising. The crucial point here, however, is that this difference
between satellite carriers and cable operators does not change the
analysis under the
Turner cases in any fundamental way. Cherry pick-
ing major network affiliates in a local market threatens the non-
carried broadcast stations in that market (and, ultimately, the viewers
who depend on them) in the same ways, regardless of whether the
motive behind the cherry picking is anticompetitive or not. Accord-
ingly, we reject the satellite carriers' argument that the carry one,
carry all rule could only be justified as a means to prevent anticompe-
titive behavior by satellite carriers.
D.
In conclusion, we hold that the carry one, carry all rule is a reason-
able, content-neutral restriction on satellite carriers' speech. It satis-
fies the
O'Brien standard because it is narrowly tailored to serve two
substantial government interests: the interest in preserving a multi-
plicity of broadcast outlets for over-the-air viewers and the interest in
preventing SHVIA's statutory copyright license from undermining
competition in local broadcast advertising markets. The rule's relation
to either interest is sufficient to render it consistent with the First
Amendment.
III.
The satellite carriers devote limited attention to their remaining
constitutional arguments. They contend that Congress exceeded its
power under the Copyright Clause when it conditioned satellite carri-
ers' rights to make use of SHVIA's statutory copyright license upon
their compliance with the carry one, carry all rule. The carriers also
argue that the rule constitutes an uncompensated taking of their prop-
erty in violation of the Fifth Amendment. The district court correctly
rejected both claims. 9999
____________________________________________________________
9999 The satellite carriers also raised a substantive due process claim
against the carry one, carry all rule in the district court, but only mention
that claim in one short footnote in their brief to us. We reject this claim
on the reasoning of the district court.
See Satellite Broad. & Communica-
tions Ass'n of Am. v. FCC, 146 F.Supp.2d 803, 832-33 (E.D.Va. 2001).
42

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The Copyright Clause gives Congress the power to "promote the
Progress of Science . . . by securing for limited times to Authors
. . . the exclusive right to their writings." U.S. Const. art. I, § 8, cl.
8. 10101010 The Copyright Clause, the satellite carriers point out, was meant
to promote the public welfare by encouraging creative work. The car-
riers contend that SHVIA exceeds Congress's authority under the
Copyright Clause because the statute plays favorites by using the
copyright power to protect the speech of independent local broadcast-
ers. The Copyright Clause does place some limits on congressional
power. For example, the clause does not permit Congress to grant per-
manent copyright protection to an author. Nevertheless, as the
Supreme Court has recognized, Congress's powers under the clause
to grant copyright protection and to define the scope of that protection
are very broad: "As the text of the Constitution makes plain, it is Con-
gress that has been assigned the task of defining the scope of the lim-
ited monopoly that should be granted to authors . . . . [T]his task
involves a difficult balance between the interests of authors . . . in the
control and exploitation of their writings . . . on the one hand, and
society's competing interest in the free flow of ideas, information, and
commerce on the other hand."
Sony Corp. of Am. v. Universal City
Studios, Inc., 464 U.S. 417, 429 (1984). The copyright power cer-
tainly includes the authority to grant statutory copyright licenses like
those created by SHVIA and the Cable Act. These statutory licenses
are designed to ensure that the high transaction costs involved in pri-
vately acquiring copyright clearances for the retransmission of broad-
cast programming do not unduly restrict the free flow of information
to the public.
See U.S. Copyright Office,
A Review of the Copyright
Licensing Regimes Covering Retransmission of Broadcast Signals, at
32 (1997). We see no reason why the Copyright Clause would pro-
hibit Congress from conditioning its grant of a statutory copyright
license on compliance with the carry one, carry all rule. That rule pro-
tects independent broadcasters against the loss of viewership that
would result if satellite carriers were allowed to cherry pick the major
network affiliates in those stations' local markets. The rule thereby
serves to prevent the statutory copyright license from being used to
undermine the government's interest in ensuring that over-the-air
____________________________________________________________
10101010 In the language of the day, "science" included works of authorship.
See Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1564 n.4
(Fed. Cir. 1988).
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viewers continue to receive a rich mix of information and program-
ming from a multiplicity of local broadcast sources. In other words,
Congress structured SHVIA's statutory copyright license in a way
that will ensure the free flow of ideas and information to over-the-air
viewers. In doing this, Congress was simply performing its constitu-
tionally assigned task of striking a balance between the interests of
authors and the public interest. Accordingly, we hold that Congress
acted within its power under the Copyright Clause when it imposed
the carry one, carry all rule.
The satellite carriers also argue that the carry one, carry all rule
violates the Takings Clause. They claim that the rule works a
per se
taking under
Loretto v. Teleprompter Manhattan CATV Corp., 458
U.S. 419 (1982), because it limits their right to exclude the unwanted
signals of local television stations from their property. The argument
fails because the Supreme Court has made clear that a
per se taking
under
Loretto must involve "required acquiescence" in a permanent
physical occupation of property.
See FCC v. Florida Power Corp.,
480 U.S. 245, 251-53 (1987) (holding that Pole Attachments Act does
not effect a
per se taking because it does not require utility companies
to provide space on their utility poles to cable companies). Here, the
statute does not
require the satellite carriers to do anything. It merely
places conditions on their use of a benefit (the statutory license) the
government need not have conferred. This cannot be an unconstitu-
tional taking of the satellite carriers' property.
IV.
Certain broadcast representatives, in their petition for review, chal-
lenge one aspect of the FCC's SHVIA Order as "arbitrary, capricious
. . . or otherwise not in accordance with law" under the Administrative
Procedure Act. 5 U.S.C. § 706(2)(A). In paragraph 99 of the order the
FCC considered the implementation of 47 U.S.C. § 338(d), which
requires satellite carriers offering local-into-local service to "provide
access to [a local television] station's signals at a nondiscriminatory
price and in a nondiscriminatory manner." Broadcasters argued to the
FCC that the statute requires satellite carriers to offer all broadcast
stations in a local market as part of one viewing package, but the FCC
rejected that argument as follows:
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[S]ection 338's anti-discrimination language prohibits satel-
lite carriers from implementing pricing schemes that effec-
tively deter subscribers from purchasing some, but not all,
local television signals. Thus, we find that a satellite carrier
must offer local television signals, as a package or a la carte,
at comparable rates.
SHVIA Order at ¶ 99.
It is this a la carte rule that the broadcasters challenge. As origi-
nally issued, the a la carte rule would apparently have allowed satel-
lite carriers a great deal of flexibility in packaging local stations for
their subscribers. For example, the rule might have allowed satellite
carriers to offer a package of the four major network affiliates in a
local market while offering any additional stations on an a la carte
basis. This option was of particular concern to broadcasters, who
argued that allowing stations to be packaged in this manner would
effectively deter many satellite subscribers from purchasing the sig-
nals of independent broadcast stations. During the pendency of this
appeal, however, the FCC issued a Reconsideration Order which clar-
ifies the a la carte rule adopted in paragraph 99 of the original SHVIA
Order. The FCC has now declared that allowing satellite carriers to
offer some stations (for example, major network affiliates) as a pack-
age while offering other local stations on an a la carte basis would
violate the nondiscrimination requirement in § 338(d).
See Reconsid-
eration Order at ¶ 48. The a la carte rule, as clarified in the Reconsid-
eration Order, allows satellite carriers to give their subscribers two
basic choices: subscribers may buy all local stations as one package,
or they may buy the individual stations on an a la carte basis. As any
objections to the FCC's original a la carte rule are now moot, we need
only consider whether this newly clarified two-option a la carte rule
can survive the broadcasters' challenge.
We must first consider the FCC's argument that the broadcasters'
attack on the a la carte rule is not ripe for review. Ripeness determina-
tions depend on both "the fitness of the issues for judicial decision"
and "the hardship to the parties of withholding court consideration."
Pacific Gas & Elec. Co. v. State Energy Res. Conservation & Dev.
Comm'n, 461 U.S. 190, 201 (1983). Here, the rule is a final agency
action, and the FCC has no interest in further "crystallizing its policy
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before that policy is subject to review."
Reg'l Mgmt. Corp. v. Legal
Servs. Corp., 186 F.3d 457, 465 (4th Cir. 1999) (internal quotations
marks and citation omitted). Moreover, the broadcasters' challenge is
fit for decision because it raises purely legal questions: whether the
a la carte rule is an unreasonable interpretation of § 338(d), and
whether the FCC has articulated a reasonable explanation for its
action in adopting the rule.
See Pacific Gas, 461 U.S. at 201 (stating
that "predominantly legal" issues are fit for decision even when fur-
ther factual development would be helpful). In addition, any hardship
considerations weigh in favor of deciding the questions now because
the broadcasters have an interest in knowing which packaging options
for local broadcast stations will be available to satellite subscribers
when the carry one, carry all rule takes effect. We therefore hold that
the legal challenge raised by the broadcasters is ripe for review.
The broadcasters first claim that the a la carte rule is not in accor-
dance with law under 5 U.S.C. § 706(2)(A) because the FCC unrea-
sonably interpreted the nondiscrimination requirement in § 338(d) of
SHVIA. We review this claim under the well-known standards articu-
lated by the Supreme Court in
Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984). Under
Chev-
ron we first ask "whether Congress has directly spoken to the precise
question at issue."
Id. at 842. Here, we ask if Congress explicitly
decided whether satellite carriers should be required to offer local sta-
tions to their subscribers in only one configuration, specifically, a sin-
gle package including all of the stations in a given television market.
If we can discern Congress's intent on this issue by using "traditional
tools of statutory construction,"
id. at 843 n.9, we must give effect to
that intent. If, however, the statute is "silent or ambiguous" about the
issue, we must defer to the agency's reasonable construction of the
statute.
Id. at 843-44.
The broadcasters argue that if we consider the structure and pur-
poses of SHVIA as a whole, we will see that Congress expressed its
clear intent that satellite carriers be required to offer all local stations
in a market as part of one package. The broadcasters claim that Con-
gress sought to ensure that every local broadcast station could reach
every household in its market. According to the broadcasters, this
goal will be undermined if satellite subscribers are allowed to choose
to subscribe to some local stations but not others. Broadcast stations
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not chosen by satellite
customers, they suggest, will lose access to
parts of their audiences just as surely as if they had been denied car-
riage by satellite
carriers. The broadcasters explain that the a la carte
rule will hurt the ratings of non-chosen stations because "[m]any peo-
ple who might not choose to purchase an entire signal would nonethe-
less watch particular programs on that station if the signal reached
their television set as it would over-the-air or through cable." Reply
Brief for Petitioner NAB at 19.
The broadcasters fail to show that Congress clearly expressed the
intent to require that all local stations be offered in a single package.
As the FCC points out, Congress knew how to impose such a require-
ment. It did so explicitly in the Cable Act.
See 47 U.S.C. § 543(b)(7). 11111111
SHVIA says only that carriers must offer local stations at a "nondis-
criminatory price and in a nondiscriminatory manner."
Id. § 338(d).
As the FCC also points out, "nondiscriminatory pricing" seems to
contemplate the possibility that local stations will be offered sepa-
rately. This is so because a carrier could not make discriminatory
pricing decisions if all local stations had to be offered only as part of
a single package. We conclude, therefore, that Congress has not
clearly expressed its intentions on the issue of whether satellite carri-
ers should be required to offer all local stations as part of a single
package. Accordingly, we ask only whether the FCC's interpretation
of the statute is reasonable. It easily meets that standard because, as
we have just explained, the statutory language contemplates the possi-
bility that stations will be offered to subscribers on an individual
basis. We therefore reject the broadcasters' argument that the a la
carte rule is contrary to the statute.
The broadcasters also argue that the a la carte rule is arbitrary and
capricious under 5 U.S.C. § 706(2)(A). Although the scope of review
under this standard is narrow, the agency is required to articulate a
"satisfactory explanation for its action [that demonstrates] a rational
____________________________________________________________
11111111 We recognize that the basic tier requirements imposed on cable oper-
ators by 47 U.S.C. § 543(b) are far more extensive than the rule the
broadcasters would have the FCC impose on satellite carriers. Neverthe-
less, the basic tier rules show that Congress is quite capable of clearly
dictating the manner in which local stations must be packaged. It failed
to do this in § 338(d).
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connection between the facts found and the choice made."
Motor
Vehicle Mfr. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983)(internal quotation marks and citation omitted). The broadcast-
ers roundly criticize the FCC's reasoning in adopting the a la carte
rule. We conclude, however, that the FCC's adoption of the a la carte
rule was not an irrational response to the statute and the administra-
tive record. Although the broadcasters claim that the a la carte rule
harms local television stations and offers no corresponding benefits,
the FCC has plausibly explained that the rule promotes consumer
choice.
See Reconsideration Order at ¶ 46. In the end, the FCC's a la
carte rule does little more than restate the statutory language of
§ 338(d). That language requires "nondiscriminatory prices," while
the a la carte rule says that carriers may offer stations a la carte at
"comparable rates." We therefore hold that the FCC's decision to
adopt the a la carte rule was not arbitrary and capricious.
V.
For the foregoing reasons, we hold that the carry one, carry all rule
does not violate the Constitution and that the a la carte rule is not arbi-
trary and capricious or contrary to law. Accordingly, the order of the
district court is affirmed, and the petitions for review of the FCC's
SHVIA Order are denied. 12121212
No. 01-1151 -
PETITION DENIED
No. 01-1271 -
PETITION DENIED
No. 01-1272 -
PETITION DENIED
No. 01-1818 -
AFFIRMED
____________________________________________________________
12121212 The satellite carriers have moved for an injunction against implemen-
tation of the carry one, carry all rule "pending final disposition of these
cases by the Supreme Court of the United States." The motion is denied.
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