EchoStar, DirecTV to offer local programming

WASHINGTON — Now that the House and the Senate have signed off on a bill that will allow satcasters to offer local programming, EchoStar and DirecTV have responded by identifying 14 cities, including New York and Los Angeles, where consumers will be able to tune in to their major local stations via satellite.

The satcasters expect to begin delivering local signals in their beachhead markets as soon as President Clinton signs the legislation. Also included in the bill is a change in copyright law to make it tougher for cybersquatters to usurp company trademarks and the names of famous people for Web site addresses.

The provision on cybersquatting will strengthen the intellectual property rights of the nation’s leading companies and a handful of celebrities. But Congress and the satcasters hope the legislation on local channel delivery will have a much broader impact, heralding a new era of competition for cable.

Since the introduction of the 18-inch satellite dish, the satcasting industry has signed up more than 10 million subscribers. “The passage of this legislation is a tremendous win for the consumers and ushers in a new era for satellite TV,” DirecTV president Eddy W. Hartenstein said.

Action on the satellite legislation comes just as the DBS industry heads into its busiest time of the year in terms of customer acquisition. As holiday buying hits its peak, both EchoStar and DirecTV will be highlighting their new local channel offerings.

But the biggest barrier to even greater success had been the inability to offer local channels, according to EchoStar founder and CEO Charlie Ergen. Wall Street, which has been thrilled with the reports that EchoStar and its rival, DirecTV, are signing up more than 130,000 new customers a month, expects the introduction of local channels to turbocharge the industry’s enrollment rate.

While EchoStar has been pushing for local channel coverage for three years, DirecTV did not announce plans to offer local service until last May. And EchoStar hopes to get a jump on DirecTV in several markets. It announced Friday that it would begin local service in 13 markets; DirecTV announced that it would launch in seven. Both DirecTV and EchoStar plan to offer local service in New York and Los Angeles and eventually roll out to the top 20 or so markets.

DirecTV said it would charge customers $5.99 for local service and EchoStar is expected to charge about the same amount.

Now that the legislation has passed, the satellite companies will need to negotiate deals with broadcasters for permission to uplink their local signals. The new law gives satcasters six months to make a deal with stations. After that period, the satcasters must turn off the local signals if they still do not have a deal with the stations.

Although broadcasters can only benefit from having their signals on the satellite, they are expected to drive a hard bargain because the deal they cut with the DBS companies is likely to serve as a precedent for similar negotiations with cablers.

Ergen had asked Congress to order broadcasters to give him a price comparable to the going rate for cable, but lost out in the lobbying battle. “With no statutory guarantee of fair pricing, the best we can do is hope that the broadcasters will not demand terms and prices from us that are higher than cable pays and that will raise costs to our customers and keep us from competing effectively with cable,” said Ergen in a statement released Friday.

Ergen also claims that the new law gives a distinct advantage to DirecTV. DirecTV has more market power, with its 7 million subscribers compared with EchoStar’s 3 million, and as a subsidiary of GM Hughes, it can offer other incentives for TV stations, such as commitments to advertise on a particular station.

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