DIRECTV 2009 Annual Report Download - page 28

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DIRECTV
Currently, we have several applications pending before the FCC, including applications to launch
and operate future satellites to support DIRECTV’s services. In general, the FCC’s approval of these
applications is required for us to continue to expand our range of service offerings while increasing the
robustness of our satellite fleet. We may not obtain these approvals in a timely fashion or at all.
As a DBS/DTH licensee and operator we are subject to a variety of Communications Act
requirements, FCC regulations and copyright laws that could materially affect our business. They
include the following:
•Local-into-Local Service and Limitation on Retransmission of Distant Broadcast Television Signals.
The Satellite Home Viewer Improvement Act, or SHVIA, allows satellite carriers to retransmit
the signals of local broadcast television stations in the stations’ local markets without obtaining
authorization from the holders of copyrights in the individual programs carried by those stations.
Another portion of SHVIA, as amended by the Satellite Home Viewer Extension and
Reauthorization Act of 2004, or SHVERA, also permits satellite retransmission of distant
network stations (those that originate outside of a satellite subscriber’s local television market)
only to ‘‘unserved households.’’ A subscriber qualifies as an ‘‘unserved household’’ if he or she
cannot receive, over the air, a signal of sufficient intensity from a local station affiliated with the
same network, or falls into one of a few other very limited exceptions. SHVERA also prohibits
satellite carriers from signing up a new subscriber to distant analog or digital signals if that
subscriber lives in a local market where the satellite carrier provides local analog or local digital
signals, respectively. SHVERA imposes a number of notice and reporting requirements, and also
permits satellite retransmission of distant stations in neighboring markets where they are
determined by the FCC to be ‘‘significantly viewed.’’ In implementing SHVIA, the FCC has
required satellite carriers to delete certain programming, including sports programming, from the
signals of certain distant stations. In addition, the FCC’s continuing interpretation,
implementation and enforcement of other provisions of SHVIA and SHVERA, as well as
judicial decisions interpreting and enforcing these laws, could hamper our ability to retransmit
local and distant network and superstation signals, reduce the number of our existing or future
subscribers that can qualify for receipt of these signals, impose costs on us in connection with
the process of complying with the rules, or subject us to fines, monetary damages or injunctions.
Also, the FCC’s sports blackout requirements, which apply to all distant network signals, may
require costly upgrades to our system. Further, an FCC order interpreting the requirement that
satellite carriers retransmit local digital signals with ‘‘equivalent bandwidth’’ of significantly
viewed digital signals may constrain our ability to deliver such significantly viewed digital signals.
The distant-signal provisions of SHVERA were set to expire at the end of 2009, but Congress
has extended that deadline to February 28, 2010. Congress may decline to renew those
provisions, which could severely restrict our ability to retransmit distant signals. Congress could
also adopt amendments to SHVERA with respect to local or distant signals, including limiting
the provision of distant signals. In particular, Congress is considering for the first time making
subscribers ineligible for distant signals where they can receive local digital multicast signals over
the air. This could adversely affect our ability to deliver distant signals to our existing or future
subscribers.
•Must Carry Requirement. SHVIA also imposes a must carry obligation on satellite carriers. This
must carry obligation requires satellite carriers that choose to take advantage of the statutory
copyright license in a local market to carry upon request the signals of all qualifying television
broadcast stations within that local market, subject to certain limited exceptions. The FCC has
implemented SHVIA’s must carry requirement and adopted further detailed must carry rules
covering our carriage of both commercial and non-commercial broadcast television stations.
These rules generally require us to carry all of the local broadcast stations requesting carriage in
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