Page 1 GAO-12-496R DISH Network Compliance

United States Government Accountability Office

Washington, DC 20548

March 23, 2012

Congressional Committees

Subject: To Date, DISH Network Is Cooperating 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 is 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

Background

To respond to this mandate, we interviewed 

the Special Master and representatives of DISH, the National Association of Broadcasters 

(NAB), and the U.S. Copyright Office, and analyzed documents provided by these individuals. 

We found that, to date, DISH is complying with the Special Master’s examination. In particular, 

DISH provided the Special Master with information on its subscribers and royalty payments, and

is cooperating with NAB on a survey of all major network-affiliated television stations 

nationwide.

The television broadcast industry provides free over-the-air programming to the public through 

local television stations; this is known as the primary transmission of the programming.

However, more than 30 million U.S. households have access to broadcast programming 

through subscriptions to direct broadcast satellite (DBS) service.5 When a DBS operator 

provides its subscribers with access to broadcast programming, it is providing a secondary 

transmission of the programming. Because the broadcast programming is copyright protected, a 

license is required to secure the public performance rights for the secondary transmission of 

these works.6

 

1

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

Under existing law, two statutory licenses permit DBS operators, such as DISH or 

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

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

to cable service.

6

This is the right to show the copyright-protected work in public. 17 U.S.C. § 106(4).

 
Page 2 GAO-12-496R DISH Network Compliance

DIRECTV®, to “clear” these copyrights, allowing them to offer secondary transmissions of 

broadcast programming.7 To take advantage of the statutory licenses, DBS operators must 

deposit with the U.S. Copyright Office a government-set royalty, which is later distributed to 

copyright owners.8

Congress has viewed localism as a primary legislative objective, with television broadcast 

stations serving as important sources of local news and public affairs programming. To protect 

local broadcast television stations and further the objective of localism, the Copyright Act,9

Communications Act of 1934,10

• Network nonduplication: This rule protects local commercial and noncommercial broadcast 

television stations’ rights to be the exclusive distributor of network programming within their 

local area.

and Federal Communications Commission (FCC) regulations 

restrict the ability of cable and DBS operators to import broadcast signals from outside the local 

area. Two key regulations include the following:

11

• Syndicated exclusivity: This rule protects the distribution rights for distributors of syndicated 

programming,12 including local broadcast stations within a designated zone.13

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),14

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 tower; 

these households are also “unserved households.”15

To broaden service to unserved households, the Section 119 statutory license allows DBS 

operators to provide distant, out-of-market television broadcast signals to subscribers in short 

markets and to other unserved households;16

 

7

17 U.S.C. §§ 119 and 122.

this is referred to as distant-into-local service. For 

8

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

royalties established using processes defined by statute.

9

Title 17 of the United States Code. 

10Act of June 19, 1934, ch. 652, 38 Stat. 1064, as amended (codified as title 47 of the United States Code). 

1147 C.F.R. §§ 76.92 and 76.122.

12Syndicated programming is non-network programming or postnetwork programming (a rerun) that is licensed 

directly to individual broadcast stations in more than one market.

1347 C.F.R. §§ 76.101, 76.103, and 76.123(b).

14Nielsen 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.

15FCC 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.

16With 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.
Page 3 GAO-12-496R DISH Network Compliance

example, using the Section 119 statutory license, a DBS operator can provide its subscribers in 

Harrisonburg, Virginia, which lacks CBS and NBC affiliates, CBS and NBC stations from 

another television market, such as Washington, D.C. In addition to the Section 119 statutory 

license, a separate license found at Section 122 of title 17 of the United States Code 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. For example, the Section 122 statutory 

license allows a DBS operator to provide its subscribers in Washington, D.C., with the broadcast 

programming from Washington, D.C., stations.

During the mid-1990s, DISH started providing satellite transmission of broadcast programming 

to its subscribers. Shortly thereafter, 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.17

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 carrier” and to then 

request that the court waive its injunction. On June 30, 2010, DISH filed an Application for 

Certification with FCC requesting qualified carrier status under Section 119, which FCC granted 

on September 1, 2010. However, as a further condition for approval, Congress 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 is 

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. The Special Master commenced his examination in accordance with the statute in 

October 2011 and must file his report by July 24, 2012. If the qualified carrier (DISH) is found to 

have willfully made a secondary transmission in violation of the statute, the waiver will be lifted 

and the permanent injunction will be reinstated.

To Date, DISH Is Cooperating with the Special Master’s Examination

DISH is cooperating with the Special Master’s examination, which consists of examining DISH’s 

compliance with the royalty payment and household eligibility requirements of the license under 

Section 119. Since beginning his examination, the Special Master has been holding regular 

meetings with representatives of DISH and NAB, which represents the four major networks and 

their affiliates. The Special Master requested, and DISH provided, information on DISH’s royalty 

calculations and payments to the Copyright Office.18

 

17CBS Broadcasting, Inc. v. EchoStar Communications Corp., 450 F.3d 505 (11th Cir. 2006).

The Special Master told us that he is 

satisfied with the information provided by DISH to date and is currently in the process of 

reviewing the methodology DISH used for its royalty payments. To determine whether any 

problems exist with DISH’s services to eligible subscribers, and whether a more detailed 

18DISH also provided the Special Master with a report on its recreational vehicle and commercial truck subscribers. 
Page 4 GAO-12-496R DISH Network Compliance

examination of DISH’s records may be needed, DISH and NAB are collaborating on a survey of 

all major network-affiliated television broadcast stations nationwide. According to the parties, the 

survey is to be distributed twice: once in February 2012 and again in May 2012, to ensure that 

affiliated stations are not having issues with DISH’s services. The Special Master has been kept

apprised of the development of this survey and expects to discuss the findings of the survey in 

his July 24, 2012, report.

According to the Special Master and officials representing the broadcast networks, DISH is 

complying with the royalty payment and household eligibility requirements. As of January 30, 

2012, DISH had submitted four royalty payments to the Copyright Office for distribution to the 

copyright owners. The Copyright Office officials said that there have been no objections filed 

regarding DISH’s royalty payments. In addition, DISH expanded its local-into-local service to 

include all 210 DMAs. DISH officials told us that the company is providing distant signals only to 

subscribers in short markets and eligible recreational vehicles and commercial trucks. Officials 

from NAB noted that they have not heard any complaints from local television stations regarding 

DISH’s provision of distant signals, in contrast to the situation prior to the litigation and STELA.

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 

correctly represented the results he has found so far in his investigation and analysis. DISH 

Network provided technical comments that we incorporated as appropriate. The Federal 

Communications Commission did not have comments.

We conducted this performance audit from October 2011 to March 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.

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-12-496R DISH Network Compliance

List of Addressees

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

(543286)
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