WASHINGTON — The House and Senate have reached a final agreement that will allow satcasters to offer local broadcast channels — a change in the law that Congress hopes will result in strong new competition to cable’s almost monopolistic hold on its 68 million customers. A final vote is expected as early as today.
The deal has received wildly mixed reviews from satcasters, legislators and even Wall Street analysts, but the bottom line is that it clears the way for satcasters to offer some local broadcast channels by the holiday season.
In the most ironic twist, EchoStar chairman Charlie Ergen is now one of the bill’s biggest critics after lobbying on behalf of the legislation for more than three years. Ergen released a statement Monday night calling the legislation “anti-consumer, anti-competitive to cable and a sellout to the special interests of network broadcasters.”
From the beginning, Ergen had asked Congress to require broadcasters to give them their station feeds at the same rates and conditions that cable enjoys. But Congress refused, forcing satcasters to begin negotiating their own deals with stations. Since cable has 68 million subs and DBS has only 10 million, it lacks the leverage cable enjoys in negotiations, Ergen argued.
In contrast, EchoStar rival DirecTV has endorsed the bill. The key difference between the two companies is that DirecTV is well on its way to agreements with all the major networks for permission to retransmit their station signals to local markets. The bill only gives satcasters six months to close a deal with broadcasters, and DirecTV enjoys a clear head start over EchoStar.
EchoStar has a more strained relationship with broadcasters. It refused to even acknowledge that current law prevents it from retransmitting local signals to many of its subscribers until a court ordered the Colorado-based satcaster to turn off the network feeds. Now if it decides to carry signals without an agreement in place it could face penalties of up to $1 million a day.
Senate Commerce Committee chairman John McCain (R-Ariz.) announced he would not support the bill. In a statement, McCain said he is concerned about “the possibility that satellite carriers will ultimately be forced to drop the local stations at the end of the six-month period if they cannot obtain reasonable retransmission consent terms from the big TV networks.”
One Wall Street analyst agreed with McCain, calling the bill “a travesty.” The analyst added that the bill once again proves the lobbying power of the National Assn. of Broadcasters and the “contempt” that Congress has for the American consumer. But another analyst said the bill would end up providing benefits to consumers.
Paul Kagen’s Larry Gerbrandt called the bill “a huge win for satcasters” because of its potential to attract more customers with local programming.
Certainly investors saw some value in the agreement. EchoStar’s stock jumped over 11% Monday, almost $8, to $78.
The bill is expected to win easy passage. The Clinton administration has been critical of some elements but has stopped short of a veto threat.
In the last week Congress added the so-called cyber-squatting clause to the satcasting bill. The provision will make it easier for celebrities and companies to control their names and trademarks on the Internet.