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Tough must carry fight takes shape

Satellite TV companies are going to have a hard time convincing a federal appeals court to overturn a law that requires them to carry all local TV stations in all local markets they serve, according to observers who attended oral arguments on Tuesday at the Fourth Circuit Court of Appeals in Richmond, Va.

"We believe that the DBS drive to overturn the statute faces a high bar," wrote Legg Mason analysts Blair Levin and Michael Balhoff on Tuesday. "The satellite lawyers jumped pretty high on Tuesday, but probably not high enough, in our opinion."

Satellite lawyers argued that the statute is unconstitutional because it requires satellite TV companies to carry certain content and is an unlawful taking of their property. They also say that requiring them to carry all local TV stations in big cities, such as Los Angeles and New York, means they cannot offer any local TV services to smaller markets, such as Richmond, Va.

For their part, broadcasters argued that Congress gave satellite companies the license to carry local TV stations on a voluntary basis.

In other words, satellite companies do not have to carry any local TV stations, but if they choose to offer local TV service in a market, then they are obligated to carry all TV stations in that market. The voluntary nature of the license undermines satellite carriers' constitutional arguments, broadcasters say.

But "the government cannot burden a benefit with an unconstitutional requirement," says Andy Wright, acting president of the Satellite Broadcasting and Communications Association.

The law requires satellite carriers to carry all stations in all local markets they serve by Jan. 1, 2002. For this reason, satellite carriers have asked the court to rule before that time. - Paige Albiniak