Page 1 GAO-13-169R DISH Network Compliance

United States Government Accountability Office

Washington, DC 20548

December 12, 2012

Congressional Committees

Subject: DISH Network Complied with the Court-Appointed Special Master’s Examination of 

Its Compliance with the Section 119 Statutory License 

This report responds to the requirement, enacted in the Satellite Television Extension and 

Localism Act of 2010 (STELA),1 mandating that the Comptroller General monitor and 

periodically report on the degree to which DISH Network (DISH) 2 was complying with the 

Special Master’s3 examination of its compliance with the royalty payment and household 

eligibility requirements of the Section 119 statutory license.4

 On March 23, 2012, we issued 

our first report on this subject;5 at the time, we found that DISH was complying with the 

Special Master’s examination. In this report, our second and final report on this subject, we 

address DISH’s compliance through the completion of the Special Master’s examination.

To respond to this mandate, we interviewed the Special Master and analyzed documents he 

provided. We conducted this performance audit from June 2012 to December 2012 in 

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

Summary

We found that DISH complied with the Special Master’s examination. DISH provided the 

Special Master with information on its subscribers and royalty payments, and cooperated on 

a survey of all major network-affiliated broadcast stations nationwide. Since our March 23, 

2012, report, the Special Master issued a report noting that there was no substantial 

evidence of improprieties by DISH regarding the Section 119 statutory license. 

 

1

Pub. L. No. 111-175, § 105, 124 Stat. 1218, (2010) amending title 17, U.S.C. by adding § 119(g)(4)(B)(vii). 2

From 1996 through 2008, DISH Network was the media and entertainment arm of EchoStar Communications 

Corporation. In 2008, EchoStar divested DISH Network. In this report, we refer to DISH Network and its 

predecessor as DISH.

3

A Special Master is appointed by a judge to carry out the duties set out in the order appointing him.

4

The Special Master’s examination and reporting requirements are set out at 17 U.S.C. § 119(g)(4)(B). 

5

GAO, To Date, DISH Network Is Cooperating with the Court-Appointed Special Master’s Examination of Its 

Compliance with the Section 119 Statutory License, GAO-12-496R (Washington, D.C.: Mar. 23, 2012).
Page 2 GAO-13-169R DISH Network Compliance

Background 

The four major broadcast networks—ABC, CBS, Fox, and NBC—own or have affiliate 

television broadcast stations in most local television markets, known as designated market 

areas (DMA),6 throughout the nation. However, some local television markets lack access 

to one or more of the four major broadcast networks; these markets are referred to as short 

markets. Further, some households are unable to receive an adequate over-the-air signal 

from one or more of the local stations owned by or affiliated with the four major broadcast 

networks, typically because these households reside a significant distance from the 

television station’s broadcast antenna; these households are also unserved households.

7

More than 30 million U.S. households have access to broadcast programming through 

subscriptions to direct broadcast satellite (DBS) service.8

 When a DBS operator provides its 

subscribers access to broadcast programming, it is providing secondary transmission of the 

programming. Because the broadcast programming is copyright protected, a license is 

required for the secondary transmission of these works.9

 Section 119 of title 17 of the 

United States Code allows DBS operators, such as DISH, to provide distant, out-of-market 

television broadcast signals to subscribers in short markets and to other unserved 

households;10 this is referred to as distant-into-local service. In addition, a separate license 

found at Section 122 of title 17 allows DBS operators to provide local television broadcast 

signals to subscribers in the same local area; this is referred to as local-into-local service. 

To take advantage of the Section 119 license, DBS operators must deposit with the U.S. 

Copyright Office a government-set royalty, which is later distributed to copyright owners.11

In 1998, a few years after DISH started providing satellite transmission of broadcast 

programming to its subscribers, the four major broadcast networks and others filed suit 

alleging that DISH provided distant, out-of-market television broadcast signals to served 

households, which were ineligible for such service. In 2006, following a decision by the 

Eleventh Circuit Court of Appeals, DISH was found to have engaged in a pattern or practice 

in violation of Section 119 by improperly transmitting distant network signals to ineligible 

households and was permanently enjoined from providing distant-into-local transmission of 

all programming originating on stations affiliated with the four major broadcast networks.12

In 2010, Congress, through STELA, amended 17 U.S.C. § 119 to provide a remedy 

permitting DISH to seek relief from the injunction issued under Section 119. By providing 

local-into-local service in all 210 DMAs, DISH became eligible for recognition as a “qualified 

 

6

Nielsen Media Research defines the DMAs. According to Nielsen, a DMA identifies an exclusive geographic 

area of counties in which the home market television stations hold a dominance of total hours viewed. There are 

210 DMAs in the United States.

7

The Federal Communications Commission categorizes television broadcast signals by grades of signal 

strength, with Grade A being the strongest. An unserved household is unable to receive a signal of Grade B 

strength or better. Unserved households include homes of all types, including recreational vehicles and 

commercial trucks.

8

In addition to DBS service, over 55 million households have access to broadcast programming through 

subscriptions to cable service.

9

This is the right to show the copyright-protected work in public. 17 U.S.C. § 106(4). 10With a statutory license, the DBS operator does not need to obtain the copyright holder’s permission for the 

secondary transmission as long as it follows the regulations and pays the Copyright Office the required royalty.

11The statutory licenses permit the public performance of the copyright-protected works in exchange for payment 

of royalties established using processes defined by statute.

12CBS Broadcasting, Inc. v. EchoStar Communications Corp., 450 F.3d 505 (11th Cir. 2006).
Page 3 GAO-13-169R DISH Network Compliance

carrier” and to then request that the court waive its injunction. On June 30, 2010, DISH filed 

an Application for Certification with the Federal Communications Commission (FCC) 

requesting qualified carrier status under Section 119, which FCC granted on September 1, 

2010. However, as a further condition for approval, STELA directed the court to appoint a 

Special Master to conduct a compliance examination of DISH. On November 24, 2010, in 

accord with 17 U.S.C. § 119(g)(4)(B), the District Court for the Southern District of Florida 

appointed a Special Master under rule 53 of the Federal Rules of Civil Procedure to perform 

the required examination and report his findings to the court. The Special Master was 

required to examine and file a report on DISH’s compliance with the household eligibility 

requirements associated with the Section 119 license and the royalty payments to the 

Copyright Office. If the qualified carrier (DISH) was found to have willfully made a 

secondary transmission in violation of the statute, the waiver would be lifted and the 

permanent injunction would be reinstated.

DISH Complied with the Special Master’s Examination

We found that DISH complied with the Special Master’s examination, which consisted of 

examining DISH’s compliance with the royalty payment and household eligibility 

requirements of the license under Section 119. During his examination, the Special Master 

held regular meetings with DISH and representatives of the four major networks and their 

affiliates. The Special Master reported that DISH provided monthly reports of its distant, outof-market signals; its Copyright Office submissions; and its auditor’s report. DISH also 

provided GAO with the same information, as we requested. As we discussed in our March 

23, 2012, report, DISH and representatives of the four major networks and their affiliates 

collaborated on a survey of all major network-affiliated broadcast stations nationwide; the 

purpose of the survey was to determine whether any problem existed with DISH’s services 

to eligible subscribers. The Special Master told us that DISH fully responded to the 20 

instances where a survey respondent raised a question about the importation of distant 

signals, which were found to be without merit. The Special Master told us that he was 

impressed with how well the parties of both sides—DISH and representatives of the four 

major networks and their affiliates—worked together on the effort and that they provided all 

the documents that he requested to conduct his examination. 

In his July 23, 2012, report, the Special Master found that the documentation and 

information provided by DISH, the networks, the associations, and the major content 

providers showed (1) no substantial evidence of delivery by DISH of distant signals to any 

persons other than eligible subscribers and (2) no improprieties in the calculation and 

payment of royalties under DISH’s statutory license. The Special Master concluded that 

there was no substantial evidence that a copyright holder could bring a successful action, 

under the provisions of 17 U.S.C. § 119, against DISH for infringement. The court directed 

that the Clerk of the District Court for the Southern District of Florida transmit the Special 

Master’s report to Congress in accordance with 17 U.S.C. § 119. According to the Clerk’s 

office, this matter is considered to be closed.
Page 4 GAO-13-169R DISH Network Compliance

Agency and Third-Party Comments 

We provided a draft of this report to DISH Network, the Federal Communications 

Commission, and the Special Master for review and comment. The Special Master noted 

that the draft report appeared to represent correctly the underlying facts and the conclusions 

set forth in his analysis and report, and that it appeared to accurately summarize his July 23, 

2012, report. The Federal Communications Commission and DISH Network did not provide 

comments. 

- - - - - - - - - - - - 

We are sending copies of this report to DISH Network; the Chairman, Federal 

Communications Commission; and the Special Master. In addition, the report is available at 

no charge on the GAO website at http://www.gao.gov. 

If you or your staffs have questions about this report, please contact me at (202) 512-2834 

or goldsteinm@gao.gov. Contact points for our Offices of Congressional Relations and 

Public Affairs may be found on the last page of this report. Key contributors to this report 

were Mike Clements (Assistant Director), Martha Chow, and Bert Japikse. 

Mark Goldstein

Director

Physical Infrastructure Issues
Page 5 GAO-13-169R DISH Network Compliance

List of Addresses

The Honorable Patrick J. Leahy 

Chairman 

The Honorable Chuck Grassley 

Ranking Member 

Committee on the Judiciary 

U.S. Senate 

The Honorable John D. Rockefeller 

Chairman 

The Honorable Kay Bailey Hutchison 

Ranking Member 

Committee on Commerce, Science, and Transportation 

U.S. Senate 

The Honorable Lamar Smith 

Chairman 

The Honorable John Conyers, Jr. 

Ranking Member 

Committee on the Judiciary 

House of Representatives 

The Honorable Fred Upton 

Chairman 

The Honorable Henry Waxman 

Ranking Member 

Committee on Energy and Commerce 

House of Representatives

(543304)
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