McCain to Vote Out Local-DBS Bill Oct. 1

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Washington -- Senate Commerce Committee chairman John
McCain (R-Ariz.) is planning an Oct. 1 vote on a bill allowing direct-broadcast satellite
companies to beam local-TV signals, Senate sources said.

McCain's measure, along with a Senate Judiciary
Committee bill, would phase in relaxed must-carry rules. McCain's legislation --
following changes made by Senate staff after negotiations with the cable industry and
others -- would not require full must-carry by DBS in a market until 2002.

Yet the Federal Communications Commission would have 180
days after enactment to file a report with Congress, saying whether some form of
must-carry would be feasible and in the public interest prior to 2002.

A McCain aide said last week that the new must-carry
provision -- which also deleted references to A/B switches as being possible must-carry
alternatives for DBS, but not for cable -- had assuaged the concerns of the cable
industry.

"We've satisfied cable's concern, although
cable will say that full must-carry is preferable," a McCain aide said.

National Cable Television Association president Decker
Anstrom released a statement last Friday indicating some measure of support for
McCain's bill.

"We strongly prefer full, immediate must-carry. But we
can agree to a comprehensive solution of satellite-related issues, so long as there is a
date certain for full must-carry and this legislation maintains its competitive
focus," Anstrom said.

Anstrom's statement was significant because the NCTA
has always insisted upon must-carry parity between cable and DBS as a condition for
supporting McCain's bill.

A cable-industry source said the NCTA will withdraw all
support for the bill if cable opponents use it to add rate-reregulation provisions or to
change program-access rules to cover non-vertically integrated programmers.

A broadcasting source questioned whether the cable industry
was backing the McCain bill (S. 2494), saying that the version understood by broadcasters
was that cable lobbyists told McCain's people that they "would be willing to
think seriously about supporting the bill" if broadcasters were also backing it.

And that's the problem right now for McCain: A split
broadcasting lobby could cripple his chances of ramming the measure through the Senate and
fusing it with a similar bill that Rep. Billy Tauzin (R-La.) is hoping to advance if he
can find any legislative daylight over the next week or so.

"We want to have legislative language ready to attach
to any appropriations bill or to any other broadcasting-related bill," Tauzin
spokesman Ken Johnson said.

Tauzin's bill would delay full must-carry for three
years, or until a DBS service reached 15 percent penetration -- whichever came first.
Prior to full must-carry, the bill would mandate carriage of five local signals, one of
which has to be a public broadcaster.

An NCTA source said Anstrom has not extended any support
for Tauzin's bill, which Johnson said was in "draft-discussion-only" form.

McCain's planned vote, which has not been formally
announced, was something of a surprise because he decided to hold the vote only hours
after the bill's first and only public hearing.

Senate Judiciary Committee chairman Orrin Hatch (R-Utah)
has companion legislation (S.1720) that would, among other things, grant copyright
licenses to DBS companies wishing to provide local-TV signals to home-dish owners who
reside in the same market. A Hatch aide said a committee vote was possible this week.

McCain is trying to pass the bill in the waning days of
this Congress, which is scheduled to adjourn Oct. 9. However, a Senate source said last
week that the target adjournment date could slip to the following Friday, Oct. 16.

Senate Majority Leader Trent Lott (R-Miss.) "is behind
us if we can get all of the parties together," a McCain aide said.

Last Friday, the National Association of Broadcasters sent
a letter to McCain, expressing eight reservations about his bill. In addition to the
must-carry issue, broadcasters said they had a problem with the financial implications of
a provision that said that TV stations had to pay to deliver quality signals to satellite
carriers' uplink facilities.

"We are going to continue to represent our
stations' best interests, whether it is a popular position or not," said Jim
May, the NAB's executive vice president of government relations, in a interview.

A McCain aide said broadcasters were "raising
straw-dog arguments" to frustrate passage of the bill.

"It's pretty obvious at this point that they are
just running out the clock," the aide added.

Broadcasting sources said only two of the "Big
Four" networks -- ABC and Fox -- were for McCain's bill, and their support was
being pledged over the objections of their own affiliates and the affiliates of the
networks that aren't backing the bill.

A broadcast-network source said the affiliates were being
"shortsighted" for objecting strenuously to McCain's must-carry approach
and for refusing to see any benefit in DBS' fully competing with cable through the
integrating of local-TV signals into their services.

The source said a local-DBS bill was desirable because such
a service would serve as a bulwark against satellite importation of distant-network
signals, which is a real headache for the affiliates.

McCain's bill, the network source added, would also
counter attempts by the FCC to redefine broadcasters' local markets in such a way as
to ensure that dish-owners can continue to receive distant-network signals, which would
erode the audience size of local network stations.

But the network source said McCain's bill would likely
not pass this year because it is "too late, too complicated." And the
bill's demise will likely generate ill will between broadcasters and McCain, who, the
network source said, is angrier at the affiliates than at the networks at this juncture.

The Association of Local Television Stations (ALTV), which
represents new TV networks and independent stations, told McCain in its Sept. 18 letter
that his bill was alarming because it would allow DBS companies like EchoStar
Communications Corp. to be selective in offering local-TV signals.

"This would come at a particularly bad time for
emerging networks like UPN [United Paramount Network], [The] WB [Television Network] and
Pax TV," ALTV president James Hedlund wrote. "Favored stations on the satellite
system will enjoy competitive benefits lost to stations not carried by the satellite
carrier."

Like cable, ALTV supports mandatory carriage of all
local-TV signals in a market if a DBS carrier elects to offer even one, in order to ensure
that affiliates of CBS, NBC, Fox and ABC do not gain at the expense of their broadcast
rivals.

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