News

Malone’s Next Foe: NAB

2/29/2008 7:00 PM Eastern

Liberty Media chairman John Malone last week got federal approval to buy nearly 40% of DirecTV Group.

At the same time, he bought into something else: A big fight with the National Association of Broadcasters.

That’s nothing new for Malone, who spent a good deal of his business life sparring with the TV-station lobby when he ran the No. 1 cable company, Tele-Communications, more than a decade ago.

210 OR BUST

The battle, probably beginning next year, will be about the need for DirecTV, the largest U.S. satellite-TV provider, to provide local TV service to all 210 markets. The company, which serves 16.8 million customers, provides local signals in 144 markets but has no plan to add more than another six, citing the need to husband bandwidth for HD services in the big markets.

The NAB is pushing for DirecTV to add the remaining 66 unserved markets by the end of 2008. While Malone’s Liberty was seeking FCC approval to acquire a controlling stake in DirecTV, NAB lobbyists urged it to withhold consent until DirecTV agreed to service every market. The agency rejected that proposal.

“We continue to believe that rural America and those who live in smaller markets deserve the same access to high-quality broadcast programming as those living in the largest markets, and we would hope the FCC revisits the issue,” said Dennis Wharton, the NAB’s executive vice president of media relations.

DirecTV’s concern is that too few people live in the smallest markets to justify building the channel capacity to serve their areas with local TV signals.

“DirecTV’s strong commitment to local into local is demonstrated by our rollout of locals in 150 markets covering over 94% of households as well as and our multibillion dollar investment in local HDs,” DirecTV vice president of government relations Susan Eid said.

DirecTV has a solution for rural America. It plans to provide subscribers with set-top boxes that will receive local digital TV signals and integrate them into the program guide in a seamless way.

“The question is, when does that happen? If the set-top box works like they say, good, I look forward to the time when it’s done … and it truly is seamless,” said Brian Lilly, owner of WSEE, the CBS affiliate in Erie, Pa., the 142 largest market. Dish Network, but not DirecTV, carries Lilly’s station.

After striking out at the FCC, the NAB intends to take its case to Capitol Hill.

The fight with DirecTV likely won’t heat up until next year, when a key provision of the Satellite Home Viewer Extension Reauthorization Act (SHVERA) expires. That provision contains a compulsory copyright license to provide ABC, CBS, NBC and Fox fare to satellite homes that can’t view the same programming locally with an antenna.

“SHVERA will be a very tough battle next year [is] what I would guess,” Dianne Smith, a broadcast attorney with Holland & Knight in Washington, D.C., said last Monday at an NAB forum.

Rep. Bart Stupak (R-Mich.) introduced a one-page bill (H.R. 5420) last month that would effectively mandate local-into-local in every market by saying that DirecTV couldn’t provide local signals in any market if it didn’t do so in every market.

SOURCE: FCC; Congress; Multichannel News research
1988: Satellite-TV providers obtain the right to offer rural customers access to ABC, CBS, and NBC programming by uplinking stations in New York and Los Angeles
1999: Congress gives direct-broadcast satellite providers the option to provide local TV signals inside their home markets but only under a carry-one, carry-all regime
2004: Congress requires DBS to provide local signals in Alaska and Hawaii

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