ALTV Balks at Must-Carry in DBS Deal

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Washington -- The trade association for independent TV
stations complained to Congress about the terms of an agreement reached recently between
the National Association of Broadcasters and DirecTV Inc., the nation's No. 1
satellite-TV company.

In a July 19 letter to key House and Senate lawmakers, the
Association of Local Television Stations (ALTV) said its "gravest concern" about
the deal was that it would allow the Federal Communications Commission to ease must-carry
burdens on direct-broadcast satellite carriers that elect to provide local TV signals.

ALTV is supporting provisions in bills passed by the House
and Senate (H.R. 1554 and S. 247, respectively) that would require full must-carry in a
market no later than Jan. 1., 2002, if the DBS carrier has elected to provide even one
local TV station in that market.

The National Cable Television Association supports the same
firm deadline.

The 135-member ALTV letter went to the members of the
House-Senate committee charged with drafting a single bill that would allow DBS carriers
to beam local TV signals throughout a local market for the first time.

"As we understand the DirecTV-NAB deal, the
fundamental public-interest decision to establish and define must-carry would be removed
from Congress to the [FCC]," ALTV president James B. Hedlund said in the four-page
letter.

NAB executive vice president of government relations Jim
May said in an interview two weeks before the ALTV letter emerged that the NAB supported a
firm Jan. 1, 2002, deadline for full must-carry.

The purpose of language giving the FCC some flexibility,
May said, was to accommodate DirecTV, which is concerned about eating up channel capacity
by having to carry multiple home shopping channels when one national feed would suffice.

"Nothing precludes must-carry as part of the
NAB-DirecTV deal," NAB spokesman Dennis Wharton said last week.

Regarding the deal's vague must-carry language, which
is a source of trouble to ALTV, Wharton said: "Sometimes you can't get
everything you want. That doesn't mean the NAB isn't supportive of carrying all
local TV stations on satellite."

The NAB and DirecTV reached a deal July 1, hoping to
expedite the work of the House-Senate conference committee by removing a few contentious
issues from the bargaining table. The agreement is not binding on Congress.

In a footnote to the ALTV letter, Hedlund called the home
shopping issue "a red herring," adding, "Only 23 of the nation's over
1,500 television stations employ home shopping formats."

The deal touched on numerous subjects, including
retransmission consent, distant-signal eligibility and must-carry.

On must-carry, the NAB-DirecTV agreement would introduce
"uncertainty about the nature and timing" of when a full carriage requirement
would take effect in a particular market.

ALTV's letter said DBS carriers would postpone making
the necessary investments "to provide widespread local-into-local" service
"as long as they believe they can get away with providing just the signals of the
biggest stations in the biggest markets."

Two weeks ago, DirecTV's chief satellite competitor,
EchoStar Communications Corp., also spoke out against the deal, saying that it was
designed to get Congress to ratify a private agreement that was no good "for
consumers, jobs or competition."

EchoStar said it was annoyed that the deal called for
dropping a provision from the House bill designed to block the major networks from
demanding exorbitant fees from DBS for permission to retransmit their signals to home-dish
owners.

"Consumers suffer if DBS has to pay such a high price
for broadcasters' signals, vis-à-vis cable, that the business model makes it
economically impractical for DBS and other video providers to undertake," EchoStar
said in a point-by-point criticism of the deal.

While ALTV considered the deal's must-carry language
too weak, EchoStar considered it too strong, saying that full must-carry by Jan. 1, 2002,
would cause small markets to go without local-into-local service indefinitely.

"A penetration test that pegs must-carry requirements
to actual market share is a more realistic approach," EchoStar said.

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