Following months of hard lobbying by broadcasters and DBS operators, the FCC last month adopted a landmark order on when, where, and what type of local signals satellite providers will have to carry.
Details of the ruling were not initially released, but it was widely anticipated not to require DBS operators to provide local-into-local coverage in all 210 markets, as broadcasters had desired. And they will have until 2013 to phase in HD in the local markets they carry, with benchmarks along the way that DirecTV and EchoStar have already met.
It’s the second chance the FCC had to do broadcasters’ bidding in the skies.
Feb. 25, the FCC approved Liberty Media’s $11 billion acquisition of DirecTV stock from News Corp., without forcing DirecTV to provide all 210 DMAs with local-into-local service—something broadcasters note News Corp. said was coming back in 2003, when it lobbied for approval of its acquisition of DirecTV.
(click thumbnail)Gregory MacDonald“We certainly hoped that the transfer of DirecTV from News Corp. to Liberty Media would be made conditional on both of those companies honoring News Corp.’s 2003 promise,” said Gregory MacDonald, president and CEO of the Montana Broadcasters Association.
“The FCC’s decision to let them off the hook is really disappointing for people in rural areas who can’t receive over-the-air TV or get access to cable, and whose only remaining choice is Dish Network,” he said. “That’s not the way to foster competition in video services, which is what the FCC has said it supports.”
There’s a good reason why the FCC didn’t feel compelled to force DirecTV to honor its 2003 promise: It never made one.
“We do not agree that the commission conditioned its approval in the News Corp.-Hughes proceeding on DirecTV’s provision of local-into-local service into all 210 DMAs by the end of 2008,” the FCC said in its order on the Liberty deal. “[And] we decline to impose a universal local-into-local condition here.”
THE MORE THINGS CHANGE
Back when News Corp. applied to buy DirecTV from Hughes, company chairman and CEO Rupert Murdoch told the House Judiciary Committee universal local carriage could be coming.
“We are already actively considering a number of alternative technologies, including ... seamlessly incorporating digital signals from local DTV stations into DirecTV set-top boxes equipped with DTV tuners,” he told the committee.
Five years later, and with a new owner, DirecTV has shifted only slightly from the Murdoch line.
“We have committed to implementing a strategy for providing a seamless, integrated local channel package in all 210 DMAs by both satellite and digital terrestrial signals,” said DirecTV spokeswoman Jade Eckstedt. “Where we are unable to offer locals via satellite, we have developed ATSC tuners that fully integrate with our set-top boxes, offering a seamless, integrated experience.”
This “hybrid solution” would see an unserved household buy its own ASTC antenna, then pay $99 to have DirecTV install it plus $50 more for a DirecTV-built ATSC tuner to be integrated with the set-top box.
The concept doesn’t impress the MBA’s MacDonald.
“I think the hybrid solution is based upon a ridiculous business model,” he said. “For DirecTV to claim that this hybrid solution will successfully serve all 210 DMAs is a specious argument. They are clearly not serving the state of Montana by following this model.”
“I am mystified by DirecTV’s decision to use this hybrid approach,” said Duane Lammers, general manager of WTWO TV-2, the NBC affiliate in Terre Haute, Ind., a station currently not carried on DirecTV but available on Dish. “There is no way DirecTV can compete with Dish Network or any other provider if they can’t deliver local television to every single TV in the household.”
Despite the FCC orders, NAB remains in action.
“We continue to believe that rural America and those who live in smaller markets deserve the same access to high quality broadcast programming as those living in the largest markets, and we would hope the FCC revisits this issue,” spokesman Dennis Wharton said in a statement after the Liberty order. “Meanwhile, we look forward to working with Rep. Bart Stupak, D-Mich., and other members of Congress to ensure that all satellite TV customers have the opportunity to receive news, entertainment and lifeline services provided by local television stations.”
In fact, Stupak may be broadcasters’ best hope for turning around the local-into-local situation. He introduced a short bill in the House Feb. 14 to amend the Communications Act of 1934 to require the carriage of all local television signals by satellite carriers in all local markets. The law, if enacted, would take effect Feb. 17, 2009, the date full-power analog transmissions will end.
FEET TO THE FIRE
Of course, given DirecTV’s success in lobbying against the NAB’s local-into-local attempts to date, the DBS carrier might convince Congress that its hybrid solution is adequate to meeting the requirements of H.R. 5470, should the Stupak-sponsored bill become law. But broadcasters will get another shot in 2009, when a provision of the Satellite Home Viewer Extension and Reauthorization Act (SHVERA) requiring DBS carriers to provide ABC, CBS, NBC, and Fox to homes unable to receive them locally expires.
(click thumbnail)EchoStar has said it will take $1 billion, three satellites and four years to deliver all HD broadcasters everywhere it provides local service.Given the intent of this provision, broadcasters could be well-placed to shoot holes in DirecTV’s hybrid solution—as long as any renewed provisions accept the local-into-local principle as being appropriate to the intent of the legislation.
If neither of these strategies work, then the best thing for broadcasters to do is to just keep up the pressure and wait, said Jimmy Schaeffler, chairman of The Carmel Group, a consulting firm based in Carmel-by-the-Sea, Calif.
“At the heart of this fight, as far as DirecTV is concerned, is the limited bandwidth offered by satellite,” Schaeffler said. “Given trends to date, digital video compression is likely to keep improving until DBS carriers can handle carriage to all 210 DMAs; first in SD and eventually HD. So whether or not the broadcasters win the local-into-local fight in Congress, the truth is that one day this will all be a moot point.”
Indeed DirecTV told the FCC March 17 that standard-definition signals could go the way of analog TV in some markets. “In such markets, DirecTV would transmit each broadcast feed using only its HD, Ka-band facilities,” DirecTV told the FCC in a filing opposing stricter rules on signal degradation and PSIP requirements. “All viewers receiving local channels in those markets would employ HD-capable set-top boxes, which can be connected to both HD and analog television sets.”
“One day both DirecTV and Dish network will carry every terrestrial TV station in the United States, with room to spare for nonbroadcast services,” said Schaeffler. “But they will only do this technically, if broadcasters keep their feet to the fire to do it for political reasons.”