News

House Panel Passes DBS Must-Carry Bill

8/09/1998 8:00 PM Eastern

Washington -- The House Judiciary Committee last week
passed a bill that would force direct-broadcast satellite carriers to carry all local TV
stations in a market if they initiate such service to dish owners.

While the vote was another lobbying coup for broadcasters
and cable operators, it was a major setback for EchoStar Communications Corp.

EchoStar said to be competitive with cable, it needed to
use its spectrum to offer a few local TV signals in many markets, rather than offer all
local TV signals in just a few markets.

"We cannot live with a must-carry provision for local
into local," said Karen Watson, EchoStar's Washington lobbyist. "There
isn't enough critical mass to do it."

EchoStar has advocated a phase-in of must-carry, with full
must-carry becoming obligatory when the DBS company has fully established itself in the
market.

But EchoStar didn't walk away empty-handed. The bill
(HR 2921), passed by voice vote, authorized DBS companies to retransmit local TV signals
into local markets, just like cable operators, for the first time. The license would be
permanent.

"Time and again, we've heard that not having the
ability to deliver network programming has been the satellite carriers'
Achilles' heel as far as competing with the cable TV industry," said Rep. Howard
Coble (D-N.C.), who sponsored an amendment that added the local-into-local provision as
well as other provisions to the bill.

The Coble amendment extended satellite carriers'
license to beam superstations and distant networks to households unserved by network
affiliates until Dec. 31, 2004. The current license expires Dec. 31, 1999.

It removed a requirement that former cable subscribers who
are eligible to receive distant network signals by satellite must wait 90 days before
purchasing such signals.

And it stayed until Dec. 31, 1999, the decision by the
Librarian of Congress to raise to 27 cents the monthly per signal, per subscriber
copyright fee to retransmit superstations and distant network signals to home dish owners.

The 27-cent rate, which DBS companies are fighting in
federal court, replaced the old rates of 6 cents for a network signal and either 14 cents
or 17.5 cents for superstations.

The new rate, which took effect Jan. 1, has produced a
windfall for copyright owners, which include Hollywood studios and sports leagues.

According to the U.S. Copyright Office, payments covering
the first half of 1998 were $50 million, compared with $17 million for the same period in
1997.

"We still haven't got all the checks yet," a
copyright office official said. No money, the official said, will be distributed until the
legislative arena becomes more stable.

The bill's future in the House is uncertain.

Rep. Billy Tauzin (R-La.), chairman of the House
Telecommunications Subcommittee, was the sponsor of HR 2911, which dealt solely with
rolling back the 27-cent rate.

Tauzin aide Ken Johnson said the provisions added to the
bill by the Judiciary Committee could jeopardize passage this year.

"Billy believes we need to settle the local-into-local
issue in a comprehensive and deliberate way," Johnson said. "We just feel that
this is not the time or place to do it."

Lobbying sources said last week that Commerce Committee
chairman Thomas Bliley (R-Va.) was upset that the Judiciary Committee advanced a bill that
encroached on Commerce's jurisdiction over communications issues like must-carry.

In the Senate, lobbying sources said Judiciary Committee
chairman Orrin Hatch (R-Utah) was preparing to vote his own bill (S. 1720) out of
committee in September. A Hatch spokeswoman could not confirm that was his plan.

That bill is substantially identical to the House version,
except that the Senate has already passed a bill to roll back the 27-cent rate to 1997
levels until March 31, 1998.

One hurdle Hatch's bill will have to clear is Senate
Commerce Committee chairman John McCain (R-Ariz.), who is opposed to saddling DBS
companies with full must-carry obligations at the outset.

Johnson said Tauzin agrees with McCain.

"We do support [full must-carry] at some point, not
immediately," Johnson said.

But full must-carry remains the chief lobbying objective of
broadcasters, especially for independent stations that feel EchoStar would prefer to carry
only the four major networks.

"This is what we have been arguing for since day
one," said James Hedlund, president of the Association of Local Television Stations,
which represents about 250 TV stations unaffiliated with the four major networks.

The cable industry also supported full must-carry for DBS
to the extent such rules apply to cable operators.

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