A spatial activity metric for characterizing an image is established, typically based one of the image variance, image gradient or DCT coefficients. The spatial activity metric is then reduced by the amount of the estimated noise in the image so that upon the spatial activity metric in connection with spatial masking, the likelihood of unmasked distortion caused by the presence of noise, such as film grain will be reduced. The effectiveness of such a spatial activity metric can be determined by determining similarity of the measures made by the spatial activity metric for regions in the image of similar texture and by determining the difference in the measures made by the spatial activity metric for regions of different texture in the image.