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Royal Ties in Check

Senate panel ponders rescinding sat fee hikes

WASHINGTON – The Senate Commerce Committee sent a clear signal Thursday that momentum is building in Congress to rescind a dramatic hike in royalty fees for satcasters.

Commerce Committee Chairman John McCain (R-Ariz.) has already lined up more than a dozen co-sponsors for a bill that would repeal the hefty hike for at least a year. If McCain’s effort is successful, it will take money right out of the pockets of Hollywood studios who are the main beneficiaries of the fees.

Hiking fees

At issue is a decision by the U.S. Copyright Office to hike monthly fees for satcasters who retransmit network signals from 6¢ per channel to 27¢. For instance, satcasting subscribers who receive a package that includes signals from the four major networks could see their monthly bill increase by 84¢ a month. In contrast, the cable industry currently pays about 3¢ per subscriber for the same copyrights.

Bad timing

McCain and other members of the Commerce Committee say it makes no sense to raise rates for satcasters, just as Congress is looking to the fledgling DBS industry as the one ray of hope when it comes to developing a competitor to cable. The same argument was effectively made by DirecTV prexy Eddy Hartenstein. “There is no justification for the DBS industry to pay higher copyright fees than the cable industry for the exact same signals,” Hartenstein said.

Serious impact

At a Senate Commerce Committee hearing Thursday, a satcasting rep from rural Montana testified that the hike would have a serious impact on his customers, where the average family income is less than $10,000. “Are we going to take money from them and send it out to Hollywood?” asked Larry Wetsit, of the Nemont Communications Inc.

But Motion Picture Assn. of America rep Fritz Attaway argued that the Copyright Office raised the satcasting rates so they would more closely reflect marketplace values. “Is it fair that the owners of programming should be paid less than what it is worth,” said Attaway, MPAA senior vice president of government relations and Washington general counsel.