NEXT SHOE TO DROP McCain to Introduce Program-Access Bill


Washington -- Senate Commerce Committee chairman JohnMcCain (R-Ariz.) is close to introducing legislation that would extend program-accessrules to unaffiliated cable programmers.

McCain aide Lauren Belvin said the bill would close another"loophole" in the program-access laws -- namely, a provision that allowscable-affiliated networks to escape by distributing video programming over terrestrialfacilities.

"Those have been the main issues that have beenhanging out there," said a Washington cable lobbyist.

Under McCain's blueprint, cable networks owned byViacom Inc., NBC Inc. and CBS Inc. would have to follow the same program access-rules ascable networks owned by MSOs.

National Cable Television Association spokeswoman TorieClarke said she preferred to withhold comment until McCain produced the bill. In testimonybefore Congress and in filings at the Federal Communications Commission, the NCTA has saidthat the current rules are working well.

Cable-programming and broadcasting sources said they wouldoppose McCain's bill, arguing that the rules should not apply to programmers thathave no leverage over cable distributors.

"We obviously have a serious concern about expandingthe program-access rules to non-vertically integrated companies," said GailMacKinnon, CBS' vice president of federal relations. "We just have aphilosophical problem with the government coming in and telling us to whom we can sell ourprogramming."

CBS Eye on People has entered into exclusive carriagecontracts with cable operators, MacKinnon said.

Small cable operators, however, are backing McCain'seffort. The Small Cable Business Association last week released a statement announcingthat one of its three legislative goals for 1998 was extension of the program-access rulesto "all programmers, even non-vertically integrated programmers."

In the House, Rep. Billy Tauzin (R-La.) is contemplatinghis own program-access bill, but Tauzin aide Ken Johnson said his bill would be broaderthan McCain's because it would include provisions on cable-ownership levels andprogram packaging.

"Program access is not the only problem, and it is notthe only issue," Johnson said. "It's encouraging that Sen. McCain is movingahead. All I can tell you is that we won't be far behind him."

McCain told reporters that the bill, expected to beunveiled in a few weeks, would also include provisions that would allow direct-broadcastsatellite carriers to offer local TV signals.

The bill, McCain said, was his attempt to respond to the"rising chorus" of complaints about cable rates without having to reregulateretail cable prices.

"I am not trying to beat up on anybody," McCainsaid in a speech to the United States Telephone Association. "In the short term,we're trying to make satellites more competitive."

Under McCain's bill, DBS companies that provide localTV signals will have some kind of must-carry obligation, but the scope of that burden isstill being developed.

"That's a tough issue," Belvin said.

Networks affiliated with cable operators are now barredfrom signing exclusive contracts with operators. To be covered by the rules, the networksmust be distributed via satellite.

McCain's bid to extend the rules to unaffiliatedprogrammers tracks with recommendations made by Ameritech New Media, which has repeatedlytold lawmakers that broadcast-affiliated cable networks have failed to deal with telcoAmeritech Corp.'s video arm due to exclusive contracts with cable incumbents.

"While introducing a bill will be a great first step,let's get that bill passed quickly and expeditiously before we declare a victory forconsumers," said Deborah Lenart, president of ANM.

Changing the rules to cover terrestrially delivered cableprogramming is seen as a response to DBS carrier DirecTv Inc.'s FCC complaint againstComcast Corp.

Comcast has refused to sell its Philadelphia-area regionalsports network, Comcast SportsNet, to DirecTv. Because SportsNet -- which carriersPhiladelphia Flyers National Hockey League and 76ers National Basketball Association games-- is distributed via microwave, Comcast said it is not obligated to sell the network toDirecTv.

The NCTA has argued that the migration of cable networksfrom satellite to terrestrial delivery is not widespread. Comcast defended its move bysaying that satellite distribution was more expensive than microwave distribution.

"There are legitimate uses of [terrestrial] that havenothing to do with evading the program-access rules," a Washington, D.C., cablelobbyist said.

Mike Rawson, a policy adviser to Sen. Conrad Burns(R-Mont.), said McCain's program-access bill, coupled with the local-into-local DBSprovisions, would enjoy broad support in the Commerce Committee, but he viewed passage ofthe bill in 1998 as an iffy proposition.

Rawson said a second McCain bill, which would roll back alarge increase in copyright fees paid by DBS carriers to carry distant networks andsuperstations, had a better chance of passing this year.

In his speech, McCain said cable-operator ownership ofprogramming and operators' ability to pass through programming-cost increases totheir subscribers were marketplace conditions that drive retail cable prices higher.

"I don't think that they are particularlyovercharging for their product," McCain said. "I think that they are justpresenting a very expensive product because there's no real economic restraints onthem."

McCain said that at least for now, he opposes further priceregulation of the cable industry. But he might change his mind if cable continues tomaintain its dominant position.