Ergen plays into rival satcaster’s hands

ECHOSTAR CHAIRMAN CHARLIE ERGEN needs to close three big deals in the next three days or hundreds of thousands of his satcasting subscribers may soon be told that they’re losing their local TV signals.

Congress decided earlier this year that DBS companies should be allowed to retransmit local TV channels, but insisted that the satcasters get the permission of the local TV stations within six months. Time is running out for EchoStar, which only has one deal. That agreement — with Fox — was secured through litigation.

Since EchoStar traditionally notifies its customers 30 days before a programming change, it had better jump-start its negotiations today. Honchos at every major network in question report that deals are not imminent and they are betting that Congress will not look kindly on Ergen if his customers start calling their offices to complain about losing their local signals.

IN CONTRAST, ECHOSTAR RIVAL DIRECTV has locked up deals with every major network but CBS.

Ergen, whose card counting skills have caused him to be banned from Reno casinos, has a history of overplaying his hand in Washington. Almost by himself, Ergen convinced Congress to adjust a few quirks in the copyright law to allow satcasters to offer local programming. But in the critical closing days of negotiations over that bill, Ergen refused to compromise on some of his key demands. And in the end, Ergen found himself in the ironic position of opposing a bill he had helped create.

One of Ergen’s key sticking points was his insistence that he should not be forced to secure permission from TV stations to resell their signals. Ergen reasoned that Congress should allow him to take any broadcast signal he wanted as a reward for providing much needed competition to cable.

But the National Assn. of Broadcasters didn’t see things that way. And DirecTV, which never wanted to offer local signals in the first place, realized it had an opportunity to mitigate the advantage Ergen had created for himself by realizing early on that DBS needed local programming.

DirecTV worked together with broadcasters to create the six-month deadline for signing retransmission agreements. An early version of the bill set an even shorter deadline, but that was abandoned because it created such a flagrant disadvantage for Ergen.

IT DIDN’T TAKE LONG FOR DIRECTV to work out deals with every network but CBS. (CBS sources say negotiations are progressing, but may require mutually agreed-to extensions to the May 29 deadline.) Of course, broadcasters want to get paid for their programming; after all, EchoStar and DirecTV charge their subscribers more than $5 a month for local signals. But DirecTV has a distinct advantage over EchoStar since its parent company, General Motors, is one of television’s biggest advertisers.

Ergen has alienated broadcasters, and even some members of Congress, with his hardball negotiating tactics.

But in the meantime, he has also found himself in the unenviable position of being exactly where his rivals want him. Ergen has no deal with any of the big three networks, and the clock is running out.

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