Broadcasters Sway SHVIA Reauthorization Bill’s Provisions

The satellite-TV industry showed once again last week that it lacks the political muscle to fend off the powerful National Association of Broadcast-ers (NAB) and the National Cable & Telecommunications Association (NCTA) when it comes to future broadcast legislation.

This time around, the U.S. House of Representatives used a voice vote last Wednesday to approve H.R. 4518, the Satellite Home Viewer Extension Reauthorization Act (SHVERA), to replace the expiring Satellite Home Viewer Improvement Act (SHVIA). The new bill does not include a provision supported by Littleton, Colo.-based EchoStar Communications [DISH] and the Satellite Broadcasting and Communications Association (SBCA) that would have aided the nation’s digital-TV rollout. The provision called for allowing direct broadcast satellite (DBS) service providers offer a distant digital signal to consumers in so-called “digital white areas” who cannot receive a digital signal from their local network affiliates.

Surviving Provisions

Included in the bill is a provision that will extend for five years the authority of DBS providers to retransmit, without permission, “distant network” and “superstation” signals at government-regulated royalty rates. However, those fees likely will be increased.

The House bill also will allow DBS companies to provide their subscribers who receive local broadcast signals with “significantly viewed” local broadcast stations from nearby communities, with certain safeguards to prevent abuse. The provision is intended to give DBS parity with cable, which has similar authority.

In addition, the House bill requires the FCC to submit a report at the end of 2005 on how to implement DBS digital “white area” capability. The bill also would prevent EchoStar from continuing to require that people in roughly 30 markets use two satellite dishes to receive local channels from the company.

Passage of a bill favorable to broadcasters understandably led to a positive statement about the legislation from the NAB. The bill “balances the needs of consumers, local television and the satellite industry,” according to an association statement. The NAB called it “vital” for the Senate to move decisively to pass the bill before the end of the session in advance of the current law’s expiration.

If the satellite-TV legislative bogs down, Congress is expected to pass a simple extension of SHVIA to help ensure that distant network and superstation signals are not cut off to consumers after Dec. 31, 2004 when the current authority expires.

Poisonous Politics?

The digital-white-area provision omitted from the House bill would have supported a congressional mandate to spur broadcasters to switch from analog to digital format. Once the transition is completed, broadcasters would be able to return the unused analog spectrum, valued at billions of dollars, to the U.S. government (SN, Sept. 27, p. 1). Part of the spectrum then could be auctioned to raise money for the U.S. Treasury, while other portions of the spectrum could be allocated to public-safety organizations.

The SBCA argued unsuccessfully that DBS is in the unique position of providing a digital signal to both urban and rural consumers because it offers 100-percent digital service to all customers nationwide. The digital-white-area provision supported by EchoStar and the SBCA would have spurred the U.S. transition to digital TV, they both contended.

“In this case, it appears that politics might well have prevailed over common sense,” said Jimmy Schaeffler, CEO and senior analyst with The Carmel Group, a Carmel-by-the-Sea, Calif.-based satellite consulting firm. “Broadcasters are complaining about competition. They are using other arguments but they want to protect their turf against new and better competition.”

The U.S. House of Representatives passed a bill that does not allow people who lack access to a digital network signal from their local broadcaster to obtain a distant network signal via satellite as a substitute. That anti-satellite bias is “not a good sign” for the industry, Schaeffler said.

“That is because consumers are missing a clear opportunity to benefit from satellite pushing the digital revolution,” Schaeffler said. “I think the digital white area provision is a great motivator to push the digital rollout in America.”

Broadcasters are resisting due to the fear that anyone from a digital white area who subscribes to a satellite TV service to gain a digital distant network signal later may not be interested in watching the local network affiliate when that broadcaster ultimately goes digital, Schaeffer explained.

EchoStar still has a chance for its provision to pass in the Senate. If it does, House-Senate conferees would meet to hammer out the differences between their respective bills. As things stand now, the Senate Commerce Committee passed a version of the SHVIA reauthorization bill that would allow the use of satellite TV services to provide distant network signals to people in areas where the local network affiliates have yet to go digital.

“If one dish is required, EchoStar would incur an estimated $100 million to reconfigure its satellites and replace equipment in 30 markets,” said Bob Peck, a satellite analyst with Bear Stearns, in a research note to his clients.

EchoStar also believes that in areas where local broadcasters fail to invest in the equipment necessary to allow consumers to view digital channels off air, a digital white area would allow those consumers to receive high-definition, distant-network signals by satellite. Right now, millions of consumers are unable to participate in the “HD revolution,” said Steve Caulk, an EchoStar spokesman.

DirecTV’s Dissent

El Segundo, Calif.-based DirecTV, the largest U.S. satellite TV service, did not join the SBCA and EchoStar in supporting the digital-white-area provision. The lack of industry-wide unity handicaps the satellite-TV sector in effectively persuading lawmakers in Congress who generally receive much greater campaign contributions from broadcasters and the cable TV industry. DirecTV has less incentive to deviate from the interests of broadcasters because of its purchase last year by News Corp. [NWS], an organization with worldwide broadcasting interests. EchoStar and DirecTV are fierce rivals, and they have not worked cooperatively in the past on other legislative initiatives. Such divisions within the industry further weaken its already minimal political clout when facing a lobbying juggernaut like the NAB.

(Steve Caulk, EchoStar, 303/723-2010; Jimmy Schaeffler, The Carmel Group, 303/723-2010; Bob Marsocci, DirecTV, 310/726-4656; Camille Osborne, SBCA, 703/739-8351)