Broadcasters Press for Digital Must-Carry

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Washington -- WCBS-TV in New York and KITV in Honolulu are
many miles and time zones apart, but they have one thing in common: They are the only TV
stations out of 119 on the air broadcasting digital signals that are also carried by
cable.

Three TV organizations, led by the National Association of
Broadcasters, cited that fact in a Feb. 22 letter to Federal Communications Commission
chairman William Kennard, pointing out that broadcasters' transition to digital is in
jeopardy unless the agency forces cable operators to carry digital-TV signals.

Under current FCC rules, all commercial TV stations have to
be on the air in digital by May 2002, but the rules do not guarantee them cable access --
a fatal flaw in the rollout of digital service as the broadcasters see it.

"The public has a vital stake in the digital
transition, and the [FCC's] foot-dragging with respect to carriage issues jeopardizes
the public's interest in its successful accomplishment," the NAB letter said.

The other signatories were the Association for Maximum
Service Television (MSTV) and the Association of Local Television Stations (ALTV).

The cable industry told a different story. During the
transition, cable asserted, digital must-carry would force channel-locked operators to
drop cable networks in favor of duplicative renditions of little-viewed TV stations at a
time when marketplace forces seem to be working.

Fox Broadcasting Co. and NBC have carriage deals with
AT&T Broadband & Internet Services, and Fox and CBS Corp. have deals with Time
Warner Cable.

So far, cable has been winning the battle at the FCC. On
two occasions this year, Thomas Power, Kennard's top mass-media adviser, stated that
the agency preferred for the market to work out carriage issues, citing broadcasters'
business-plan uncertainty to justify a hands-off policy by the FCC.

Two weeks ago, Power indicated that the commission was also
concerned that digital must-carry -- coupled with basic-tier placement and buy-through
mandates -- would cause cable rates to spike.

In their letter to Kennard, the broadcasters indicated that
they could not accept suspension of the May 2002 deadline in lieu of must-carry --- as 78
percent of broadcasters voted in a January poll -- because stations have already made the
investments necessary to convert to digital.

The answer, the broadcasters said, is the prompt adoption
of digital must-carry rules.

"Broadcasters are honoring their end of the bargain at
an ultimate cost of some $17 billion, but other parties to the process are not doing their
part," the broadcasters said, demanding a face-to-face meeting with Kennard on the
matter.

The letter also urged the FCC to prod cable-equipment and
TV-set manufacturers to agree on compatibility standards so that digital-TV sets will
display broadcast programming transmitted over cable.

But that issue was apparently addressed one day after the
letter to Kennard, when the National Cable Television Association and the Consumer
Electronics Association announced an agreement on digital-TV technical standards.

In another development on the digital must-carry front,
TV-station-owner Paxson Communications Corp. said it would provide free airtime to
political candidates if the FCC required cable carriage.

Paxson Communications made the proposal in a Feb. 11 letter
to Kennard from its chairman, Lowell W. Paxson.

Paxson included the free airtime commitment in a
seven-point "Public Interest Code of Conduct" he fashioned. Under the plan, TV
stations that elected for retransmission consent would not have to abide by the code.

Paxson said TV stations would provide five minutes of
candidate time per night between 5 p.m. and 11:35 p.m. in the 30 days before the election.
The stations would have the right to pick the races, he added.

Paxson Communications, which is 32 percent-owned by NBC, is
the largest TV-station owner. Its 72 stations reach about 75 percent of U.S. households
and provide family-friendly programming.

In the letter, Paxson appeared to make an important legal
concession to cable -- namely, that TV stations could assert cable must-carry for the
analog or the digital signal, but not both.

In an interview last week, Paxson said that was an
incorrect interpretation of what he wrote in the letter. "We believe that the [1992
Cable] Act does provide for automatic carriage of the digital signal," he added.

Paxson said the free-airtime proposal reflected the views
of a report submitted to the FCC in December 1998 by the Gore Commission, officially
called the Advisory Committee on Public Interest Obligations of Digital Broadcasters.

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