News

Ergen’s Big SHVIA Score

7/18/2004 8:00 PM Eastern

Key legislation for the direct-broadcast satellite industry was trending against him, but last week EchoStar Communications Corp. chairman and CEO Charlie Ergen finally caught a small break on Capitol Hill.

Senate legislation introduced last Tuesday would give EchoStar Communications Corp. more time than House legislation to stop requiring consumers in dozens of markets to obtain a free second dish to view all local TV stations.

Sen. John Ensign (R-Nev.) unveiled a 21-page bill extending the Satellite Home Viewer Improvement Act for another five years, along with some modifications that upset the local-broadcaster lobby. Senate Commerce Committee chairman John McCain (R-Ariz.) is backing the bill.

TWO MORE YEARS

The House bill would give EchoStar just one year to stop the two-dish requirement, which applies in about 40 markets. Ensign’s bill would phase it out by Dec. 31, 2007, giving EchoStar at least an additional two years to comply.

The Senate Commerce Committee is scheduled to vote on the bill July 20.

In a statement, EchoStar said that although it was pleased with the general thrust of the bill, it would have preferred four years to convert to a one-dish system.

“The bill’s proposal to phase in the transition to one dish in certain markets where two dishes are currently required is far better than the unworkable plan proposed in the House legislation,” said Karen Watson, EchoStar’s vice president of government relations.

Ensign’s bill would require EchoStar to cut its two-dish markets to 33 within six months, to 28 by Dec. 31, 2005, to 14 by Dec. 31, 2006 and to zero by Dec. 31, 2007.

STILL TOO SOON

EchoStar said that pace was too swift.

“We remain concerned with the proposed timetable in the Senate bill, because six months is not enough time for consumers to receive the equipment necessary to continue receiving local service and not enough time to build a new satellite,” said Watson. “We fear the initial deadline will create major consumer inconvenience, confusion, and frustration.”

PANELS CLASH

The Ensign bill sets up a clash with the Senate Judiciary Committee and the House Energy and Commerce Committee and House Judiciary Committee. Those panels have not been receptive to EchoStar’s SHVIA proposals, which the company views as consumer-friendly.

The National Association of Broadcasters is expected to use its muscle to ensure that the House’s one-year deadline on two dishes becomes the law.

“NAB strongly opposes the Ensign McCain legislation,” NAB spokesman Dennis Wharton said. “The Ensign-McCain proposed changes to EchoStar’s two-dish scheme relegates Hispanic and religious television viewers to second-class citizenship for over three more years.

“Three Congressional committees have passed reasonable, compromise legislation that extends SHVIA, and we’re hopeful that their proposals prevail.”

In one provision favorable to Ergen, the Ensign bill would allow direct-broadcast satellite providers to import distant HDTV feeds of ABC, CBS, NBC and Fox to dish owners who can’t receive that high-resolution format from the local affiliates.

Once digital signals become available from local affiliates, satellite importation would have to cease within 120 days.

The other SHVIA bills excluded broad HDTV-importation authority.

Ergen has pushed for an HDTV-importation policy. He says TV stations have defaulted on their commitment to use free digital spectrum to offer ubiquitous HDTV.

The NAB has strongly objected, claiming digital signals are widely available and that all Ergen wants to do is poach customers who should be viewing network programming via local stations.

Broadcasters want DBS firms to provide their subscribers with their local signals so that those broadcasters do not lose audience and advertising revenue.

NAB: AID LOCALS

“The paramount goal of SHVIA reauthorization should be to ensure consumer access to local television stations that provide news and lifeline information to local audiences, not distant out-of-market stations. Congress should promote carriage of analog or digital signals in all 210 markets, a goal that [the Ensign bill] fails to accomplish,” NAB’s Wharton said.

Ensign’s bill would also classify aircraft and federally documented ships as “unserved households,” which means they would automatically qualify to purchase distant network feeds transmitted by satellite carriers.

Passage of a new SHVIA law is vital to hundreds of thousands of DBS customers. They will lose access to distant network signals and superstations after Dec. 31, 2004 because that is the date when the DBS copyright licenses to provide those signals expire.

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