Budget pact holds boon for b’casters

WASHINGTON — The balanced budget agreement, which the House and Senate are expected to formally approve as early as today, seals a multibillion-dollar bonanza for broadcasters, who are being handed a huge chunk of digital spectrum for free.

Despite his objections to the spectrum provision, President Clinton has promised to sign the first balanced federal budget in 28 years into law.

Among a thousand other details buried in the trillion-dollar budget pact is a provision that will give every TV station in the country a valuable second channel to begin broadcasting a digital signal. Although the digital airwaves would be worth billions if sold on the open market, legislators decided to forgo any payment.

The momentum was too great even for Senate Commerce Committee chairman John McCain (R-Ariz.) to resist. McCain has been a vocal critic of the plan to give broadcasters the valuable spectrum. “He has been up here long enough to know he has no choice,” a McCain aide said Tuesday.

Securing the spectrum without having to compensate the federal government is a huge victory for the broadcast lobby, which has spent the last three years fighting efforts to auction the spectrum.

Broadcast lobbyists also defeated an effort by the White House to charge rent for the use of the second channel. Although use of the second channel is being called a loan, Congress is poised to approve legislation that virtually eviscerates the effort to set a 2006 deadline for returning one of the two channels broadcasters will soon control. The budget bill orders the FCC to extend the deadline if less than 85% of the homes in a market have access to a digital signal.

Privately, broadcast lobbyists admit the language guarantees they will be operating both an analog and a digital signal until well into the next century.

While Clinton administration officials conceded defeat Tuesday in their effort to make broadcasters pay, they held out hope that Senate rules will block another provision of the budget agreement which ends the ban on owning more than one TV station in a market.

The administration also objects to a related provision that would end the ban on owning a TV station and a newspaper in the same market. Both provisions would only go into effect in markets larger than 400,000 and are contingent on broadcasters completing the transition to a digital-only service.

The White House is hoping that a Senate bylaw, known as the Byrd Rule, will keep the deregulatory provisions out of the budget agreement. Under the Byrd Rule, the agreement may include language that is specifically targeted at taxing or spending only.

But supporters note that the duopoly and cross-ownership provisions would increase the pool of candidates who can bid for any spectrum that is eventually returned to the government at the end of the digital transition period. The larger pool would increase the competition for the airwaves and thus likely result in higher auction revenue.

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