Tauzin Forced to Choose Between Friends

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Washington -- Rep. Billy Tauzin (R-La.) is living proof
that it is harder to confront your friends than your enemies.

Tauzin readily admitted that few in Congress are closer to
the broadcast and satellite industries than he is. But in recent days, the chairman of the
House Telecommunications Subcommittee has lost the luxury of being chummy with both.

What triggered the split was the two-page bill that Tauzin
introduced last month, which calls for restoring CBS and Fox signals to 700,000 home-dish
owners who were cut off Feb. 28 and which prevents another 1.5 million from being cut off
in about 45 days.

While the bill is a boon for the satellite lobby, it
outraged the National Association of Broadcasters. On March 4, NAB president Edward Fritts
sent Tauzin a letter declaring the NAB's "complete and total opposition" to
the bill (H.R. 851).

"What we have here is a shooting match between the
Hatfields and the McCoys, and we've got kin on both sides," Tauzin press
secretary Ken Johnson said.

Tauzin, Johnson insisted, has not taken sides.

"Billy has made it clear that his No. 1 allegiance is
to the folks back home, and we've got 171,000 people back home with satellite
dishes," Johnson said.

The NAB-Tauzin rift is surprising, given their close
relations over the years.

Name an issue dear to the NAB's heart -- must-carry,
retransmission consent, free airtime for candidates, children's television quotas or
spectrum fees and auctions -- and Tauzin has been there defending the TV-station lobby.

Yet, at the same time, Tauzin wouldn't complain if it
his epitaph included the program- access provisions of the 1992 Cable Act, which gave
EchoStar Communications Corp. and DirecTV Inc. mandatory access to vertically integrated
cable networks.

"He has been the NAB's go-to guy for years, and
he literally gave birth to the DBS [direct-broadcast satellite] industry," Johnson
said.

Tauzin's bill surfaced after CBS and Fox, in an effort
orchestrated by the NAB, took the satellite industry to court over the illegal importation
of distant-network signals.

The networks gained a major victory when U.S. District
Court Judge Lenore Nesbitt slapped satellite wholesaler PrimeTime 24 with an injunction
and later enjoined DirecTV from trying to sidestep her decision and prevent the Feb. 28
cutoff.

Unless Congress intervenes, the second wave of dish owners
is expected to lose service by April 30.

The controversy is rooted in the Satellite Home Viewer Act,
a copyright law enacted in 1988. Under the SHVA, dish owners residing on the fringe of a
TV market may buy distant-network signals via satellite if they are unavailable locally
using conventional rooftop antennae.

Broadcasters sued after discovering that thousands of dish
owners who could receive local-network signals were buying Fox and CBS from PT 24
illegally. Some said the dish owners ignored the law; broadcasters said PT24 and its
agents "duped" consumers.

Local-network affiliates are concerned that a
distant-signal invasion will reduce the size of their markets and shrink their revenue,
perhaps leading to the crackup of the network-affiliate relationship on which so much of
the free, over-the-air broadcasting system is based.

Last month, the NAB issued a release claiming that over the
SHVA's 11-year existence, the satellite industry has pocketed $557 million in illegal
distant-signal revenue -- dollars that should have gone to local-network stations.
(DirecTV president Eddy Hartenstein told the Senate Commerce Committee that he had no idea
where the NAB came up with that figure.)

The satellite industry said the SHVA is unfair, and it
needs to be updated to reflect the picture-quality demands of consumers. A critical flaw,
according to the Satellite Broadcasting and Communications Association, is that dish
owners who get snowy off-air pictures are not entitled to access network programming via
satellite.

The NAB said the answer is for the satellite industry to
buy their customers modern antennae.

As voted out of the Telecommunications Subcommittee two
weeks ago, Tauzin's bill tilts in favor of the satellite industry. In fact, it would
allow all 2.2 million dish owners to continue receiving Fox and CBS for another six months
-- maybe longer, depending on the scope of final legislation.

During the 180-day moratorium, Tauzin would require the
Federal Communications Commission to develop a new signal-reception standard and a better
model for predicting which households are eligible to buy distant signals.

"We are disappointed with that," said Ronald
Winders, vice president and general manager of WAFB, a CBS affiliate in Baton Rouge, La.

The NAB claimed that the bill would gut Nesbitt's
injunction, which CBS and Fox obtained after waging a protracted and expensive legal
battle to protect their industry from satellite lawbreakers.

"It effectively rewards illegal behavior," Fritts
said in his letter to Tauzin.

Just about every lawmaker involved in the dispute,
including Tauzin, would like to see the NAB and the SBCA settle it on their own.

Broadcasters, armed with their injunction, don't have
much incentive to bargain right away. What's more, broadcasters' leverage over
the satellite industry grows by the day because the SHVA provision that allows the sale of
distant-network signals expires Dec. 31.

Broadcasting sources, however, said their leverage is
offset by the considerable pressure that they feel coming from Tauzin, House Commerce
Committee chairman Rep. Tom Bliley (R-Va.), Rep. John Dingell (D-Mich.) and Senate
Commerce Committee chairman John McCain (R-Ariz.) to settle with the satellite industry.

NAB officials were unavailable for comment last week due to
a snowstorm that closed down Washington, D.C.

Winders said he is hopeful that Tauzin will modify his
bill, but he understood that Tauzin is trying to craft a solution that also serves to
promote competition with cable, which is being deregulated March 31.

"We are convinced that Billy is not going to do
anything that would hurt us in the long run," Winders said. "He is trying to
find a way to constrain cable rates. He sees DBS as the best way of doing that."

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