DirecTV Snubs DBS Peers In NAB Retrans Accord

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The National Association of Broadcasters and DirecTV Inc.
late last Thursday announced agreed-upon provisions for draft legislation covering local
and distant broadcast-signal distribution.

Direct-broadcast satellite rival EchoStar Communications
Corp. and industry lobbyist the Satellite Broadcasting & Communications Association
were not involved in the talks.

In a July 1 letter to the Conference Committee on the
Satellite Home Viewer Act legislation, the NAB and DirecTV urged members to adopt the
agreement, which, they added, does not represent either party's "perfect
solution."

EchoStar decried a proposal that would suspend
anti-discrimination provisions and retransmission-consent requirements for broadcasters
that provide local signals to DBS.

"Anti-discrimination language is key to any final law
that seeks to make [DBS] competitive to cable," EchoStar chairman Charlie Ergen said
in a prepared statement.

But some observers said that as the language stands, cable
is not the only threat to EchoStar.

DirecTV is believed to have reached retransmission
agreements with a number of broadcasters in key markets, and EchoStar could have
difficulty negotiating consent under the same terms without anti-discrimination rules.

DirecTV has been engaged in "active discussions"
over retransmission consent, according to spokesman Bob Marsocci, but it has not yet
announced such agreements.

"The sad part of this thing is that with only two
players, the DBS industry still can't work together," Alpert & Associates
president Mickey Alpert said. "You cannot fight the broadcasters with a divided
industry."

Marsocci said DirecTV felt that talking directly to the NAB
"was the best way to bring certainty to the legislative process."

In both EchoStar's and DirecTV's favor, last
week's agreement would drop a 90-day waiting period for current cable subscribers who
sign up for distant network signals.

It also eliminates a House provision requiring DBS
companies to give free off-air antennas to ineligible distant-network-signal customers who
are scheduled to see their signals cut off.

Rep. Howard Coble (R-N.C.), chairman of the House
Subcommittee on Courts and Intellectual Property, said in a prepared statement that he was
pleased that the NAB and DirecTV reached their agreement without government interference.

"Of course, the devil is in the details, so I will
want to study this proposed agreement carefully," Coble added.

The SBCA was still reviewing the NAB/DirecTV agreement last
Friday. A spokeswoman said executives there remain hopeful that favorable SHVA legislation
would be passed before DirecTV is scheduled to cut off signals to illegal distant network
subscribers July 31.

In a letter sent last Tuesday to DirecTV president Eddy
Hartenstein and NAB president Eddie Fritts, Pegasus Communications Corp. CEO Marshall
Pagon urged the parties to suspend the pending disconnects until the legislation pending
in Congress is enacted.

In a phone interview last Friday, Pagon said most of the
proposals that DirecTV and the NAB had negotiated did little to address rural customers,
or even those in markets outside of the top 20 or 30 that are likely to be served by
local-into-local signals.

Pegasus has holdings in both broadcast and DBS, mostly in
rural areas.

The NAB's agreement with DirecTV supports incentives
to expand local-into-local to smaller markets, but it does not endorse mandating DBS
delivery of local signals in any particular market.

Pagon is hopeful that the industry will find a way to work
together once it gets past its growing pains.

"Part of the process of growing up is that companies
can compete with each other and yet link arms on important issues," Pagon said.
"DBS hasn't reached maturity yet."

Ted Hearn contributed to this story.

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