Texas Stations Sue DirecTV, EchoStar


A pair of Texas TV stations denied carriage by DirecTV Inc. and EchoStar
Communications Corp is taking the satellite carriers to federal court in a suit
that also alleged conflict of interest by an official at the Federal
Communications Commission.

Johnson Broadcasting Inc. owns stations in Houston and Dallas that were
rejected for carriage by DirecTV and EchoStar on the basis that Johnson sent
letters invoking its mandatory-carriage rights July 2, 2001, or one day late
under FCC rules.

Johnson filed complaints at the FCC against DirecTV but not EchoStar.

The chief of the FCC's Cable Services Bureau, W. Kenneth Ferree, ruled in
favor of DirecTV that denial of carriage based on letters being sent after the
deadline was lawful under FCC rules.

In the suit, Johnson said it was entitled to send the letters July 2 because
July 1 was a Sunday and the FCC had typically postponed deadlines to the next
business day to accommodate deadlines falling on Saturdays, Sundays and federal

Johnson filed the suit Jan. 15 in U.S. District Court for the Southern
District of Texas in Houston.

According to Johnson, EchoStar broke a promise to carry the stations Dec. 7,
2001, two days after the FCC dismissed Johnson's first complaint against

Johnson did not lodge must-carry complaints at the FCC against EchoStar as it
did against DirecTV, even though Johnson had also sent EchoStar its must-carry
letters one day after the deadline.

Instead, Johnson bypassed the FCC and named EchoStar as a co-defendant in the

EchoStar spokesman Marc Lumpkin said Johnson's stations
were denied carriage consistent with the FCC's ruling, adding that he doubted that EchoStar had been served
with the suit.

A DirecTV spokesman was looking into the matter and did not have
immediate comments.

In the 12-page suit, Johnson alleged that in deciding the company's dispute
with DirecTV, Ferree had a conflict of interest that denied Johnson procedural
safeguards at the FCC.

'The FCC bureau chief who issued . the opinion failed to recuse himself
notwithstanding the fact that his largest client while he was in private
practice prior to being appointed to the FCC in May 2001 was PanAmSat [Corp.], a
sister company of DirecTV,' the suit said.

An FCC spokeswoman said Ferree would not comment on Johnson's suit.

As a private attorney with Washington, D.C.-based law firm Goldberg, Godles,
Wiener & Wright, Ferree represented PanAmSat in that company's effort to
block FCC approval of Lockheed Martin Corp.'s acquisition of 49 percent of
Comsat Corp.'s stock and FCC approval to transfer to Lockheed FCC authorizations
held by a Comsat affiliate.

Ferree is heading the FCC's task force charged with reviewing EchoStar's
merger with DirecTV's corporate parent, Hughes Electronic Corp.

The FCC also needs to approve EchoStar's deal to pay $5 billion for Hughes'
80 percent interest in PanAmSat.

After consulting with FCC ethics officials, Ferree said he would not bow out
of the PanAmSat portion of the transaction based on his prior representations of
PanAmSat before the FCC.

Johnson's Houston station, KNWS, is an independent and the broadcast home of
Major League Baseball's Houston Astros. In Dallas, Johnson operates station
KLDT, also an independent.

EchoStar and DirecTV serve about 600,000 subscribers combined in the Houston
and Dallas markets.

Under the FCC ruling, Johnson's stations are not entitled to obtain DBS
carriage until Jan. 1, 2006.

Johnson plans to appeal the CSB's decisions in the DirecTV complaints to the
four FCC members, who seldom reverse bureau rulings.

Johnson is also planning to ask the FCC to deny EchoStar's merger with
DirecTV, a lawyer for Johnson said Tuesday.

Under the Satellite Home Viewer Improvement Act of 1999, EchoStar and DirecTV
were required on Jan. 1, 2002, to carry all requesting local TV stations in
markets where they have elected to carry any local TV stations. TV stations
denied carriage may seek relief at the FCC and in federal court.

In the suit, Johnson said the FCC's rejection of its first DirecTV complaint
was arbitrary and capricious because the agency ignored precedent regarding the
movement of deadlines that conflict with weekends and holidays.

Johnson has asked the court to award damages for the period of noncarriage by
DirecTV and EchoStar. The suit alleged breach of contract by EchoStar and
violations of state and federal antitrust laws entitling Johnson to treble

Based upon 'information and belief,' Johnson said in the suit that DirecTV
encouraged EchoStar to reverse its carriage commitment so that if their merger
were approved, the new company would not have to carry Johnson's stations.

Johnson said EchoStar's decision not to carry the stations
at DirecTV's request was a 'combination and conspiracy' in violation of Texas
and federal antitrust laws.