Dish Network Corp.. v. Fed. Communications Comm'n

• Decision Date: 24 February 2011
• Docket Number: No. 10–16666.,10–16666.
• Parties: DISH NETWORK CORPORATION; Dish Network, L.L.C., Plaintiffs–Appellants,v.FEDERAL COMMUNICATIONS COMMISSION; Julius Genachowski; Michael J. Copps; Robert M. McDowell; Mignon Clyburn; Meredith Attwell–Baker; United States of America, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

636 F.3d 1139

39 Media L. Rep. 1692

11 Cal. Daily Op. Serv. 2441

2011 Daily Journal D.A.R. 2975

52 Communications Reg. (P&F) 684

DISH NETWORK CORPORATION; Dish Network, L.L.C., Plaintiffs–Appellants,

v.FEDERAL COMMUNICATIONS COMMISSION; Julius Genachowski; Michael J. Copps; Robert M. McDowell; Mignon Clyburn; Meredith Attwell–Baker; United States of America, Defendants–Appellees.

No. 10–16666.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 13, 2011.Filed Feb. 24, 2011.

Courtney J. Linn, Orrick, Herrington & Sutcliffe LLP, Sacramento, CA; E. Joshua Rosenkranz (argued), Orrick, Herrington & Sutcliffe, LLP, New York, NY, for plaintiffs-appellants DISH Network Corporation and DISH Network, L.L.C.Tony West, Assistant Attorney General; Daniel G. Bogden, United States Attorney; Mark B. Stern (argued) and Dina B. Mishra, Department of Justice, Washington, D.C., for defendants-appellees Federal Communications Commission, Julius Genachowski, Michael J. Copps, Robert M. McDowell, Mignon Clyburn, Meredith Attwell–Baker, United States of America.Appeal from the United States District Court for the District of Nevada, James C. Mahan, District Judge, Presiding. D.C. No. 2:10–cv–01075–JCM–PAL.Before: J. CLIFFORD WALLACE, BARRY G. SILVERMAN, and RICHARD C. TALLMAN, Circuit Judges.

OPINION

TALLMAN, Circuit Judge:

DISH Network Corporation and DISH Network, LLC (collectively “DISH”) appeal the district court's order denying DISH's motion for a preliminary injunction. DISH argues that it is likely to succeed in its argument that § 207 of the Satellite Television Extension and Localism Act of 2010 (STELA), Pub. L. No. 111–175, § 207, 124 Stat. 1218 (amending 47 U.S.C. § 338 (2006)), which accelerates the timetable under which satellite providers that carry local stations in high-definition (HD) format in a particular market must carry “qualified noncommercial educational television stations” in HD, is a content-based regulation of free speech in violation of the First Amendment. DISH asserts that the statute interferes with its editorial discretion and judgment by forcing it to delay offering commercial programming in HD to certain markets. That delay, DISH argues, forces DISH subscribers to receive Public Broadcasting Service (PBS) ¹ programs in HD before commercial programs, even though they “prefer watching the World Cup and American Idol in vivid colors over Jim Leher and Elmo.”

Because we agree with the district court that DISH failed to demonstrate it is likely to succeed on the merits, we affirm the denial of injunctive relief. See Winter v. Natural Res. Def. Council, 555 U.S. 7, 129 S.Ct. 365, 381, 172 L.Ed.2d 249 (2008).

I

It is helpful first to briefly review how satellite television works, why it is regulated, and how § 207 came to be enacted. There are only two major Direct Broadcast Satellite providers in the United States: DirectTV, which has about 18.5 million subscribers, and DISH, which has about 14.1 million subscribers. They rely on assigned radio frequency bands to transmit signals to consumers from satellites located at designated orbital locations in space. The transmissions are governed by the Federal Communications Commission (FCC) and international regulations.

The United States has been assigned eight orbital locations for providing satellite service. Each location is divided into 32 satellite channels. Transmissions from satellites in the same orbital location may cause signal interference, so Congress has authorized the FCC to grant licenses to satellite service providers assigning them the use of specified channels at particular orbital locations. The licenses are limited in duration and the FCC may grant or renew them only if doing so will serve the public interest, convenience, or necessity. 47 U.S.C. § 307.

In 1999, Congress created an exception to copyright law to better enable competition between satellite TV and cable TV. The Satellite Home Viewer Improvement Act of 1999 (SHVIA) amended the Copyright Act to create statutory copyright licenses for satellite carriers that allow them to retransmit a local broadcast station's signal without first getting permission from the individual copyright holders. The copyright license is also subject to statutory and regulatory conditions.

As a condition of their licenses, carriers have certain public obligations. For example, they must also carry, on request, the signals of all other television broadcast stations in the same local market. 47 U.S.C. § 338(a)(1). See Satellite Broad. and Commc'ns Ass'n v. FCC, 275 F.3d 337, 352–66 (4th Cir.2001) (rejecting First Amendment challenge). Additionally, all satellite providers must set aside four to seven percent of their channel capacity for “noncommercial programming of an educational or informational nature.” 47 U.S.C. § 335(b); see also Time Warner Entm't Co. v. FCC, 93 F.3d 957, 973–77 (D.C.Cir.1996) (per curiam) (rejecting First Amendment challenge), reh'g en banc denied, 105 F.3d 723 (D.C.Cir.1997). Finally, and particularly relevant to the case at hand, satellite service providers are required to treat all local television stations the same regarding picture quality. In re Implementation of Satellite Home Viewer Improvement, 16 F.C.C.R.1918 ¶ 118 (2000).

The picture-quality condition was applied to HD programming in 2008 through an FCC rule. See In the Matter of Carriage of Digital Television Broadcast Signals, 23 F.C.C.R. 5351, ¶ 5 (2008); 47 C.F.R. § 76.66(k). Under that rule, satellite providers that carry any local stations in HD format in a particular market must carry all local stations in HD format. The regulation gives providers four years to meet the following implementation timetable: they must achieve compliance in fifteen percent of the markets in which they carry local channels in HD by Feb. 17, 2010; thirty percent by Feb. 17, 2011; sixty percent by Feb. 17, 2012; and one-hundred percent by Feb. 17, 2013.

The challenge is that HD consumes three to four times the channel capacity as standard definition (SD) programming. Because DISH currently lacks capacity to offer all local channels in HD, it prioritized local market television stations according to customer demand, and decided not to prioritize transmitting PBS in HD. Instead, DISH offered the major networks in HD and delayed offering PBS in HD except in Alaska and Hawaii, where it was legally obligated to do so. By comparison, its competitor DirectTV provided 106 channels of HD PBS in its regions of operation.

Congress determined that by forcing public broadcasting stations to the back of the HD priority line, DISH was jeopardizing public television's ability to compete with commercial television and thereby threatening the right of consumers “to receive federally funded programming broadcast by PBS.” 156 Cong. Rec. E849–04 (daily ed. May 12, 2010) (speech of Rep. Anna G. Eshoo). In response, Congress enacted § 207 of STELA to ensure “that satellite providers do not discriminate against noncommercial high definition signals” and to promote “an even playing field.” Id.

The provision accelerates the HD timetable for “qualified noncommercial educational television stations.” Under § 207, satellite carriers who take advantage of the statutory compulsory copyright license to provide local broadcasts in HD format must also provide “qualified noncommercial educational television stations located within that local market” in HD format. Carriers were given until December 31, 2010, to meet the requirement in fifty percent of the local markets in which they provide HD programming and until December 31, 2011, to comply fully in all remaining markets.

But Congress created an exemption to § 207 for satellite providers who entered into a private carriage agreement with at least thirty qualified noncommercial educational television stations. To avoid § 207's more burdensome timeline, DISH entered into such a contract. Doing so forced it to postpone launching HD services in ten new television markets. DISH then filed suit to enjoin § 207, arguing that it is a constitutionally impermissible content-based regulation of the company's First Amendment right to free speech.

The district court denied DISH's motion for a preliminary injunction without opinion. During the hearing, the court focused entirely on whether DISH was likely to succeed on the merits of its claim. The court concluded the regulation was content-neutral and not an infringement on DISH's First Amendment rights. It reasoned that § 207 “is designed to keep PBS competitive with other local outlets,” not to regulate content. In summarizing its conclusions, the district court explained:

[U]nder the case law we aren't dealing with content. You've got to offer PBS and now they're saying ... you've got to offer it in HD so it's as attractive as other local stations and I don't think it impinges or infringes the First Amendment.

We agree.

II

We review a district court's grant or denial of a preliminary injunction for abuse of discretion and the underlying legal principles de novo. Stormans, Inc. v. Selecky, 586 F.3d 1109, 1119 (9th Cir.2009). The grant or denial of a preliminary injunction lies within the discretion of the district court and we may reverse a district court only where it relied on an erroneous legal premise or abused its discretion. Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d 750 (9th Cir.1982). To determine whether the district court abused its discretion, the reviewing court “must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Id. at 752 (citations omitted).

We have noted that “in some cases, parties appeal orders granting or denying motions for preliminary injunctions in order to ascertain the views of the appellate court on the merits of the litigation,” but that due to the “limited scope of our review ... our disposition of appeals from...