Consumers Union Stumps for EchoStar

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Washington — A leading consumer group is urging Congress to protect hundreds of thousands of EchoStar Communications subscribers who, by judicial fiat, are nearing the loss of out-of-market feeds of ABC, NBC, CBS and Fox programming.

Consumers Union, publisher of Consumer Reports and other publications with a combined subscribership of 7 million, raised its concerns in a Nov. 17 letter to all U.S. senators. Among other things, the letter said legislation should protect not just programming choice but also competition between EchoStar's Dish Network and its main rival, DirecTV, controlled by Rupert Murdoch's News Corp.

RURAL HARM

“We are concerned that with only one other satellite-television provider available, rural consumers will be left without meaningful marketplace choice and that competition may be irreparably harmed,” wrote CU senior policy analyst Jeannie Kenney.

Without judicial intervention, about 850,000 EchoStar subscribers will lose access to distant signals on Dec. 1. Distant signals are feeds from ABC, NBC, CBS and Fox affiliates in New York and Los Angeles, beamed by EchoStar to rural customers who can't get the same programming locally with an off-air antenna.

EchoStar does not need permission to retransmit distant signals.

Just before the Senate broke for Thanksgiving, Sen. Patrick Leahy (D-Vt.) introduced a bill (S. 4067) designed to soften the impact of the pending cutoff, ordered in October by a federal judge who found that EchoStar had broken the law by selling distant signals to hundreds of thousands of legally ineligible customers.

By the terms of the Satellite Home Viewer Act of 1988, U.S. District Judge William P. Dimitrouleas said he was required to impose a nationwide injunction, which ends up punishing not just EchoStar's illegal customers, but also hundreds of thousands of legal ones.

BIG SENATE BACKERS

Leahy, who takes over as Judiciary Committee chairman in the new Congress in January, introduced his bill with support from some key people, including Hillary Clinton (D-N.Y.), a likely presidential candidate; Sen. Daniel Inouye (D-Hawaii), the incoming chairman of the Commerce Committee; and Sen. Robert Byrd (D-W.Va.), expected to take the reins at the Appropriations Committee.

If the Leahy bill became law, it would not ensure that legally eligible customers — those who live in so-called white areas where broadcast TV signals are weak — could continue to buy distant signals from EchoStar.

“Customers who live in 'white areas' and who were legally receiving distant broadcast networks from EchoStar should not be penalized for the company's wrongful acts,” CU's Kenney wrote.

The Senate is expected to return to work on Dec. 4, just a few days into the injunction. Some on Capitol Hill expect a flood of complaints, forcing Congress to pass legislation to quell the rebellion.

“It's going to be a big stink and it is going to be a political problem,” said Jimmy Schaeffler, senior financial and consulting analyst with The Carmel Group, who has been involved with EchoStar on legal matters over the past decade. “Are they [EchoStar] going to be able get enough hoopla going to get Congress to say, 'Hey, we've got to do something about this?' I don't think so.”

Leahy's bill would be the likely starting point for Senate action. In its most helpful provision, the bill would allow EchoStar to resume delivering network signals to markets where it does not offer a package of local TV signals. That's about 40 markets in all and they include less than 5% of all TV households.

Because the bill provided a modicum of relief in the most rural-TV markets, CU endorsed the Leahy bill's “approach,” but nothing more specific than that.

In so-called short markets — areas missing at least one major network affiliate — EchoStar could fill the gap by importing a distant signal, according to Leahy's nine-page bill.

The bill, however, would ban EchoStar from the resumption of distant signals in the 170 markets where it offers local TV stations, something CU opposed. But those customers can replace distant signals with local ones, Kenney said.

Customers who lose distant signals from EchoStar can't purchase a similar package from DirecTV if they live in a market where DirecTV offers local TV signals. Only the local package may be purchased by new customers, under provisions of the Satellite Home Viewer Extension Reauthorization Act of 2004.

Under Leahy's bill, EchoStar customers would lose the right to seek waivers from local affiliates to buy distant signals. Owners of recreational vehicles and commercial trucks, exempt from white area restrictions in current law, would lose the exemption under the bill.

In August, EchoStar reached a $100 million settlement — ultimately rejected by Dimitrouleas — with all TV stations involved except those owned by News Corp., which pressed the judge to hand down the sweeping injunction.

Leahy's bill took a middle position: It's less severe than the injunction and less accommodating than the settlement.

CHEER FROM ECHOSTAR

EchoStar applauded the “bipartisan effort to enable innocent consumers to continue to receive distant network channels, particularly subscribers who live in rural areas and markets where there is no local broadcaster.”

Even though the vast majority of TV stations settled, they have stopped supporting EchoStar's campaign to modify the injunction, both in court and in Congress.

National Association of Broadcasters spokesman Dennis Wharton said his group “opposes a bailout by Congress of a habitual copyright infringer.”

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