EchoStar Rejects Many Must-Carry Bids

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Washington— EchoStar Communications Corp. has rejected dozens of requests from local TV stations seeking mandatory carriage in a dispute that the Federal Communications Commission might be forced to resolve, sources said Aug. 6.

A must-carry provision in the federal Satellite Home Viewer Improvement Act requires any direct-broadcast satellite provider that offers a local broadcast-television signal in a given market to extend carriage to any other broadcaster in that market who requests it, starting in 2002.

At present, the 6-million-subscriber EchoStar provides local TV signals — mostly ABC, CBS, NBC and Fox affiliates — in 36 major markets.

When the full must-carry mandate kicks in on Jan. 1, 2002, EchoStar could be forced to add dozens of local stations to its channel lineups.

Eligible TV stations not currently carried by EchoStar had until July 1 to opt for either must-carry status or retransmission consent. Last week, however, EchoStar sent letters informing an estimated 270 stations that had chosen must-carry that their requests had been denied.

EchoStar apparently based its rejections on the stations' "failure to prove signal meets legal standard of quality necessary for mandatory carriage," according to sources who had seen the rejection letter, which took the form of an itemized checklist.

The DBS provider evidently believes TV stations must provide the testing data which shows they can deliver a signal of sufficient quality to its receiving facility in a designated market area.

FCC rules require cable operators to test a broadcast signal before rejecting a must-carry request. Although the agency said it wanted the cable and DBS rules to work harmoniously, EchoStar apparently maintains that DBS carriers are not required to perform tests before rejecting a must-carry election.

EchoStar also evidently believes that when a must-carry dispute over signal strength arises, the legal and economic burden of demonstrating that a valid must-carry election had been made — through either testing or evidence that testing would clearly prove delivery of a sufficient signal — shifts to the TV station.

National Association of Broadcasters spokesman Dennis Wharton said the broadcasting trade group was aware of EchoStar's widespread rejection letters and asserted that the company's grounds were baseless.

"This is yet another EchoStar stunt to circumvent their obligations under SHVIA and FCC regulations," Wharton said.

EchoStar spokesman Marc Lumpkin acknowledged that the company had rejected several must-carry elections, but declined to say how many.

"Yes, we did have to reject some requests," said Lumpkin. "They were entirely based on their poor signal quality. As the rules state, they have to have a good quality signal and some did not."

A spokesman for No. 1 DBS provider DirecTV Inc., with 10 million subscribers, said the company received hundreds of carriage requests — either for must-carry or retransmission consent — and returned numerous rejection letters.

"We have told them that because they have a poor-quality signal that we have rejected their request and told them to improve the quality of their signal," said DirecTV spokesman Bob Marsocci.

Without providing specifics, Marsocci said DirecTV accepted a number of must-carry requests and rejected others from TV stations that erroneously believed DirecTV was providing local TV signals in their markets.

No formal complaints have been filed with the FCC, but both EchoStar and local TV stations have contacted the agency about the dispute.

"The EchoStar people told us what they were going to do. Broadcasters called up and said, 'How is this going to work?' " said William Johnson, deputy chief of the FCC's Cable Services Bureau.

Johnson said the FCC has a pending petition for reconsideration in the DBS must-carry proceeding that may provide the agency with an avenue for settling the dispute should no one file a complaint.

The FCC didn't indicate to EchoStar that the agency supported its position on rejecting must-carry elections, he said.

"We certainly did not say that this was the right way to proceed," Johnson said.

EchoStar's Lumpkin called the rejections an "initial" decision that the company would "revisit" at a later time.

"We are working with [the TV stations] to help them improve their signal and we will be meeting with them in the near future," Lumpkin said.

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