Malone Nabs DirecTV

The FCC gave its blessing to the transfer of control of DirecTV from News Corp. to John Malone’s Liberty Media this week, sparing the satellite provider from the increased local TV carriage obligations that broadcasters had sought.

Broadcasters had seen a chance to force DirecTV to carry local signals in all 210 markets nationwide.

DirecTV now provides local service in 144 markets, serving more than 94 percent of U.S. households and has “committed” to providing local signals in all markets by the end of 2008 using ATSC antennas and set-top boxes to capture those over-the-air signals and integrate them with the satellite offerings.

Broadcasters have said such a solution is not good enough and many viewers will be unable to receive the local signals.

The FCC decision followed a massive lobbying effort by DirecTV. Company representatives contacted commissioners, their legal advisors or senior Media Bureau staff at least 10 times in February to argue against local carriage or local HD obligations.

“Rudy, as promised, I talked with Chase (Carey, DirecTV CEO),” DirecTV attorney Susan Eid wrote in a Feb. 21 e-mail to Rudy Brioché, legal advisor to Democratic Commissioner Jonathan Adelstein, who has argued for complete local-into-local service. “As expected, the answer is no different that he communicated with Commissioner Adelstein last week. As stated, this transaction will collapse under any further financial obligations.”

DirecTV maintained that the nationwide local-into-local requirement is at odds with broadcasters’ desire that satellite operators offer any available local HD signals in the markets where they carry local broadcasters.

DirecTV has said it plans to allocate existing satellite capacity to the additional rollout of HD in large markets and to some expansion of local-into-local service. It also said that providing local service by satellite would cost more than $250 million.

DirecTV, along with Dish Network, also proposed benchmarks for HD in the markets it has local carriage, but the operators have largely already reached the benchmarks they proposed for 2012.

The solution for small markets lies in a tuner accessory viewers can buy from DirecTV for an estimated $50. Users will have to buy their own antennas, which DirecTV will install for $99.

Adelstein called the hybrid solution “an unfair service tax on rural households.”

“Scores of markets have been ignored by DirecTV,” he wrote in his partial dissent. “The commission should not neglect these markets, relegating them to second-class video citizenship.”