EchoStar Denies Set-Aside Violation

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EchoStar Communications Corp. is denying that it violated Federal Communications Commission rules when it allocated a public-interest channel to a Christian programmer that had agreed in exchange to give up must-carry rights for several TV stations.

EchoStar told the FCC it charged Daystar Television Network the appropriate amount under FCC rules and that side deals, including giving up must-carry rights, were not prohibited by the FCC in 1998. That's when the agency required direct-broadcast satellite carriers to make at least 4% of their channels available to non-profit, educational programmers.

Not 'Auctioned'

"The only limitations are that a DBS [operator] cannot 'auction off' the 4% set aside by charging programmers more than 50% of the actual cost of delivering the signal. The [FCC] should therefore conclude that EchoStar was within its rights to choose Daystar programming," EchoStar said in an Oct. 16 filing.

Dominion Video Satellite Inc. — a DBS operator that shares an EchoStar satellite to distribute Sky Angel, a Christian programming service — has complained to the FCC that EchoStar effectively auctioned a national channel to Daystar only after Daystar agreed not to seek mandatory carriage for 10 full-power TV stations it owns.

Dominion said FCC pricing rules for DBS set-aside channels were breached because Daystar received preferential treatment over other nonprofit programmers that didn't have valuable spectrum rights to barter.

Daystar, now seen in 9 million Dish Network homes, has countered that Dominion was upset mainly because Daystar's selection by EchoStar represented competition for Christian-programming viewers.

Dominion has an exclusive contract with EchoStar to provide satellite-delivered Christian programming to EchoStar customers. Dominion's Sky Angel service has fewer than 500,000 subscribers.

Daystar has asked the FCC to issue a ruling that Dominion should not be allowed to use the exclusivity contract to prevent EchoStar from fulfilling its set-aside obligations.

Initial comments on Daystar's request were filed with the FCC on Oct. 16. Replies are due Oct. 31.

In comments to the FCC, EchoStar positioned itself as a third party in "the middle of a power struggle" between Dominion and Daystar.

"The net result is that EchoStar is caught in the crossfire between two organizations that while professing as their mission the wide dissemination of the Gospel, in fact have chosen courses designed solely to maximize the dissemination of their own particular programming," EchoStar said.

Dominion's Sky Angel has gone to federal court to protect its exclusivity deal with EchoStar. A federal judge ruled in Dominion's favor but stayed the decision pending appeal.

No 'Power Struggle'

Dominion chairman and CEO Robert Johnson said EchoStar's decision to carry Daystar was at the heart of the issue.

"EchoStar is trying to cover up their own wrongdoing by piously portraying themselves as an innocent bystander, claiming that they are caught in the middle of a 'power struggle' between two other organizations," Johnson said in statement.

Johnson also alleged that other public-interest programmers were unwilling to quarrel with the EchoStar-Daystar swap "for fear that speaking out would jeopardize their chances of ever being carried on an [EchoStar] set-aside channel."

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