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                           June 5, 1997
                                                       DA 97-1199
                                                     CSB-ILR 97-4
                                             
Benjamin J. Griffin, Esq.                 Released:  June 5, 1997
Reed, Smith, Shaw & McClay
1301 K Street, N.W.
Suite 1100 - East Tower
Washington, D.C.  20005-3317

Dear Mr. Griffin:

     This is in response to your letter of May 20, 1997, in which you request guidance on the
applicability of Section 624(d)(3) of the Communications Act (47 U.S.C.  544 (d)(3)) to certain
parts of the "Faces of Addiction" program series that Home Box Office ("HBO") will distribute
to its cable television affiliates later this year.  

     As your letter notes, Section 624(d)(3) specifies that if a "cable operator provides a
premium channel without charge to cable subscribers who do not subscribe to such channel," the
cable operator must, 30 days before such channel is provided without charge:  (1) notify its
subscribers of its plan; (2) notify its subscribers of the time when the premium channel will be
offered without charge; (3) notify its subscribers that they have a right to have the premium
channel blocked; and (4) block the channel upon the request of any subscriber.  For purposes of
Section 624(d)(3), a "premium channel" is defined as any pay service offered on a per channel or
per program basis that offers movies rated by the Motion Picture Association of America
("MPAA") as X, NC-17, or R.  

     You state that the "Faces of Addiction" series consists of three one-hour programs (two
documentaries and one "docudrama") that focus on the problems of drug, alcohol and tobacco
addiction in America.  You also state that, in the interest of gaining a wide viewership for the
series, you have authorized your cable and satellite distributors to make the series available to all
subscribers, either by unscrambling the HBO service feed during the exhibitions of the programs
or by exhibiting the programs on an available basic channel.  You further state that, as a technical
matter, unscrambling the HBO feed during the exhibitions of the programs is less burdensome
for many cable operators than making those same programs available to subscribers on a
different channel.  You express concern, however, that cable operators will be reluctant to
unscramble the programs if they first must comply with Section 624(d)(3)'s notice requirements.

     Your letter argues that Section 624(d)(3) is aimed at circumstances where premium
services are made available to non-subscribing customers for extended periods (e.g., a weekend)
for promotional purposes, during which time non-subscribers might be exposed to programming
they would find unacceptable because of its MPAA rating of X, NC-17 or R.  You believe that
these circumstances are not present in your case because:  (1) non-HBO subscribers would not
have access to any lengthy part of the HBO schedule, but only discrete programming; and (2) the
documentaries do not contain material that would be rated X, NC-17 or R by the MPAA, and
thus any non-HBO subscriber who watched these programs would be exposed to content no
different than they might be exposed to in a normal network television news documentary. 
Because of explicit language in the docudrama, you state that it probably would receive an R
rating from the MPAA and you therefore do not seek authority to permit your cable operator
affiliates to unscramble the feed during the docudrama without providing the appropriate notice
under Section 624(d)(3).

      We believe that the strongest formulation of your argument might be that where a
programming distributor:  (1) provides discrete programming to a cable operator that was not and
would not be rated by the MPAA as X, NC-17, or R (we express no opinion on the appropriate
MPAA rating for the particular programs described in your letter); and (2) permits the cable
operator to provide such programming free of charge to its subscribers on whatever channel the
cable operator desires, the notice requirements of Section 624(d)(3) generally would not be
implicated because the cable operator would not be providing a "premium channel" to
subscribers but simply programming that originated on a premium channel. 

     While, as the staff of the Commission, we believe that this might present your strongest
argument, we are not in a position to give a definitive view at this time.  As you are aware,
neither the statute, the legislative history nor Commission precedent address the specific situation
described in your letter. 

                                   Sincerely,



                                   Meredith J. Jones
                                   Chief, Cable Services Bureau