McCain: Local DBS OK, New Cable Bill on Way

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Washington -- Senate Commerce Committee chairman John
McCain (R-Ariz.) last week promised to bundle pending copyright-royalty legislation with a
new bill that would expand program-access rules and permit satellite carriers to feed
local TV signals into local markets.

McCain said his legislative program was an attempt to
inject competition into cable markets and to counter reregulation efforts in Congress.
Yet, should his bills flounder or prove ineffective as laws, McCain predicted that
Congress would 'hammer' the cable industry.

'If that fails ... there's no doubt that they
will go back to reregulation,' McCain said.

McCain indicated that he would be willing to join the
pro-regulation forces if competitive forces fail to materialize.

'I strongly oppose regulation, but I don't oppose
regulation as much as I oppose unregulated monopolies,' he said.

Over in the House, Rep. Howard Coble (R-N.C.), chairman of
the Courts and Intellectual Property Committee, introduced a bill (H.R. 3210) that would
allow direct-broadcast satellite companies to offer local signals in local markets, but
with must-carry and retransmission-consent obligations with regard to commercial
broadcasters.

'We are obviously pleased that it includes the
must-carry and some other protections for local into local,' said National
Association of Broadcasters spokesman Dennis Wharton.

Coble's bill would ban cherry-picking of broadcast
signals by requiring carriage of all signals in a market if a DBS company elects to offer
local signals under rules to be spelled out by the Federal Communications Commission.

The National Cable Television Association applauded the
Coble bill, saying that it would not raise cable's copyright payments for
superstations and distant network signals.

'Chairman Coble's bill takes an important step
toward promoting competition, while ensuring'competitive parity,'' NCTA
president Decker Anstrom said in a prepared statement.

Last year, McCain unveiled a bill (S. 1422) that would
block a decision forcing satellite carriers to collect from subscribers 27 cents per month
in copyright royalties for each network and superstation signal.

McCain thinks that the 27-cent rate -- compared with past
rates of 6 cents for networks and either 14 cents or 17.5 cents for superstations -- is
too large an increase and substantially above what cable operators pay for the same
signals.

Last Thursday, McCain held a hearing on the bill, which
garnered the support of DirecTv Inc. president Eddy Hartenstein and Gene Kimmelman of the
Consumers Union.

But Fritz Attaway, senior vice president of government
relations for the Motion Picture Association of America, said the bill was unnecessary and
the new 27-cent rate was reasonable.

McCain said his new bill, to be unveiled
'shortly,' would allow DBS carriers to enter local markets. He did not say to
what extent DBS companies that go local would have to shoulder cable-regulatory burdens,
such as mandatory carriage of all local TV signals.

A McCain aide said must-carry was being debated with a
preference for letting DBS carriers gain a foothold in the market before full must-carry
obligations would kick in.

'It seems to me that the phase-in idea is gaining
steam,' a McCain aide said.

McCain is concerned, however, about a must-carry regime
that would allow DBS carriers to select local TV stations for carriage based on viewership
levels. Such a plan, a McCain aide said, would favor established networks over start-ups.

McCain declined to spell out his program-access bill, but a
McCain aide said expansion of the rules to include non-vertically integrated programmers
and non-satellite-delivered programming was in the mix.

Last week, Senate Judiciary Committee chairman Orrin Hatch
(R-Utah) sent McCain a letter reminding him that Judiciary has primacy over copyright
legislation and urging him to postpone a Commerce Committee vote until an agreement could
be worked out.

'I intend to sit down with Sen. Hatch and try to work
out any differences that we have on the issue, and I'm sure that we will be able to
do so,' McCain said.

Hatch is planning to offer his own copyright legislation.
The timing is uncertain.

'Stay tuned,' a Hatch aide said.

Coble's bill, which overlaps with the Commerce
Committee's jurisdiction, would make key changes to the Satellite Home Viewer Act,
which expires Dec. 31, 1999.

Among other things, the Coble bill would:

• Make the satellite compulsory license permanent;

• Allow former cable subscribers to buy network
signals from a DBS firm without having to wait 90 days, as current law requires;

• Impose a zero copyright royalty on DBS
retransmission of TV signals into the market or the DMA of their origin;

• Abolish the Copyright Royalty Arbitration Panel and
create a new rate-setting body consisting of one full-time chief judge, who is to be a
seasoned copyright lawyer, and two part-time judges, to be experts on the affected
industries; and

• Allow DBS distribution of a national feed by Public
Broadcasting Service.

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