Mr. Chairman and distinguished members of this subcommittee, thank you for the opportunity to speak to you today. I am Cullie Tarleton, Vice President of Television for Bahakel Communications. We own 8 TV stations, including one in Charlotte and one in Raleigh, North Carolina, appearing on behalf of the National Association of Broadcasters.

In the months since two courts acted decisively to enforce the Satellite Home Viewer Act (the "Act"), much attention has been focused on the question of whether satellite carriers should be permitted to continue delivering distant network signals in violation of the Act to subscribers who can receive the signal of a local station over the air. Some have also suggested that the Act should be substantially revised. I am here to emphasize our belief that the Act works and that the modifications proposed in your bill will ensure that satellite carriers can take advantage of technological advances while preserving the network/affiliate system that has successfully provided network programming via local outlets to nearly all American households.

It was of course this subcommittee, in connection with the enactment of the Act in 1988 and the 1994 amendments, that carefully examined the impact of the importation by satellite of duplicative network programming on the local broadcasting system and the programming marketplace. In this subcommittee's sound judgment, legislation was needed to ensure that all consumers have access to network programming. At the same time, this subcommittee recognized that copyright protection for local broadcasters was necessary to preserve their role in serving their communities with local programming. To balance these concerns, this subcommittee created a limited exception to exclusive programming copyrights assigned to television networks and their local affiliates. Based on objective signal intensity measurements, consumers who cannot receive local broadcast signals over the air are eligible to receive network programming from a satellite television company.

Satellite carriers, however, repeatedly and willfully violated the copyright law by selling network signals from distant cities to subscribers who could receive their local network station's signal free over the air. In the face of this flagrant violation of copyright law, two courts have vigorously enforced the law. Judge Lenore Nesbitt of the U.S. District Court in Miami issued injunctions ordering PrimeTime 24 not to deliver CBS or Fox television network programming to any customer who does not live in an unserved household. The permanent injunction will take effect with respect to certain subscribers on February 28, 1999, and with respect to the remainder on April 30, 1999.

Satellite carriers have ignored the objective signal standard of the SHVA and have ignored broadcasters' copyright protection. Judge Nesbitt wrote:

PrimeTime made a conscious decision to flout the law when it was well aware of what the law required. PrimeTime does not restrict its sale of network programming to locations that local stations have stated are unserved. In fact, PrimeTime places no geographical limits on its sale of CBS or Fox programming.

Judge Nesbitt also concluded that "a company cannot build a business on infringements and then argue that enforcing the law will cripple that business."

Judge Bullock of the U.S. District Court in North Carolina, in requiring PrimeTime 24 to terminate distant network service to Raleigh, NC area subscribers, found that, "PrimeTime has ignored or turned a blind eye to the necessity of objective signal strength testing and thus willfully or repeatedly provides network programming to subscribers that are ineligible under SHVA." As a result of these court orders, satellite carriers will once and for all be stopped from delivering network programming from distant cities to subscribers who can receive local network programming over the air.

At the request of members, the Federal Communications Commission has also examined whether the Act permits consumers who are truly unserved by local television stations to receive distant network signals from a satellite service. In its recent Report and Order, the Commission concluded that the Grade B signal intensity standard, upon which the Act relies to determine whether a household is served, accurately indicates when picture quality is acceptable. The FCC in addition recommended possible improvements to the methodology used to predict a Grade B signal and adopted new on-site measurement procedures.

Regrettably, on the eve of the effective date of the Miami injunction, satellite industry players have devised further schemes to avoid compliance with the SHVA and even the judge's order. Earlier this week, DirecTV announced its intent to continue delivery of distant network signals after February 28 notwithstanding Judge Nesbitt's order.

Today, the four major networks and their affiliate organizations are filing a request for a temporary restraining order and preliminary injunction against DirecTV's willful attempt to evade the injunction. The Judge is expected to hear argument on these motions today. The same organizations have also brought an action against EchoStar's attempts to evade the Act.

Mr. Chairman, we have reviewed your bill and believe that it reflects the correct approach to further tailoring the SHVA to fulfill its purposes. We would suggest two areas in which this otherwise excellent legislative package would benefit from modest improvement. First the bill would require satellite carriers to provide subscriber lists to network stations that are being retransmitted. This notice requirement would be more effective to ensure satellite carrier's compliance, however, if the local network station into whose market a signal is being transmitted were notified. The local network affiliate will have much greater incentive to seek enforcement of the Act.

Second, the Act should provide that once a carrier avails itself of the new compulsory license provided by your bill, it should no longer deliver distant network signals to any subscriber in the same local market where it delivers a local signal.

Let me conclude by saying that broadcasters applaud this subcommittee's fairness and judgment in supporting the Act and in considering changes that will protect the system of local programming and ensure access to network television for all Americans. Broadcaster will continue to cooperate in this process and work toward fair resolution of these difficult issues.

Thank you for the opportunity to express our views on this issue to this subcommittee.