Measure to allow local broadcasting

By Dave Lindorff

    The day of head-to-head competition between the satellite broadcasters and cable operators came a little closer last Friday when DirectTV,
the larger of the nation’s two major satellite broadcasting companies, won support of the National Association of Broadcasters for a bill in Congress to allow satellite TV to carry programming from local stations.
    The agreement clears away a major hurdle to the bill’s passage, and supporters now say the measure will likely gain approval this summer.
     Local stations have long resisted granting the satellite companies the right to carry their local programming because they feared they would face the risk of having programming from other stations broadcast into their markets. The pending bill would allow the satellite companies to deliver local broadcasts but would restrict them from sending in signals from other stations.
     Echostar, the other major satellite broadcaster, is also pushing for passage of the bill, though it has not signed on to the compromise with the NAB.
       By granting satellite TV access to local programming, the measure would put satellite TV on equal footing with cable, allowing it to compete for the first time for suburban and urban viewers.
      The inability to carry local fare has left satellite TV with the dregs of the  marketplace—the largely rural viewers the cable systems haven’t found it economically worthwhile to bother wiring.
     In anticipation of the bill’s passage, satellite broadcasters have been busy moving into more populated areas.
     "We already offer local stations to viewers with dishes in 13 cities," says an Echostar spokesman. "By the year's end we expect to be available in 50 percent of the continental U.S." The company says cities served include New York, Boston, Los Angeles, Chicago, Salt Lake City, Denver and Chicago.
      DirectTV says its subscriber base grew by 49
percent over the past year. DISHTV has been adding subscribers this year at a rate of over 100,000 per month.
    Echostar recently bought satellite licenses from News Corp. and MCIWorldCom, and DirectTV has acquired the Primestar satellite system. The two systems now claim nearly 10 million subscribers, and another 2 million subscribers are served by Cband. That's against 66 million cable subscribers.  
      Growth is expected to become even more dramatic once the two companies begin signing up local stations for uplinks.
       Tracy Reiner, a media buyer at Hill HolidayConnors Cosmopoulos, notes that to date advertisers and ad agencies have tended to view satellite coverage as a free bonus.
    "The fact that the Bloomberg Channel is carried on DirectTV and DISHTV hasn't meant much to us," she says. "If we can't measure it we can't really deal with it."
      But she says that attitude may be changing. "If they get their subscription base up above 20 million, we’d have to recognize it," she says. "After all, there are cable networks that are only going out to 13 million homes, and networks like Food, Travel and Fox News aren't much
above 20 million, but we recognize them as hot niche markets."
     Analysts say that a 20 million subscriber base is within reach for the satellite industry.
    "The satellite companies can use their rural base as a niche platform and build from there," says Alan Banks, executive media director for North America at Saatchi & Saatchi. "But they need to get the research to show who
they're reaching."
    The satellite companies are already challenging cable on the basis of rates. Direct TV's basic service, which includes 95 channels, costs $29.99 a month, plus the one-time $200 cost of an 18-inch satellite dish.
       Echostar offers consumers a rebate plan that in effect makes its dish free. Customers who take a $48.96 monthly subscription for a year, which includes 100 channels plus HBO and Showtime, receive the dish at no cost. Basic DISHTV 40-channel service is only $19.99 a month.
      Meanwhile, the satellite companies are also planning to move early to take advantage of their digital capabilities. Both companies are planning to offer high-definition TV broadcasts, with DISHTV preparing to carry HBO’s movies in HD-TV later this year.

-Dave Lindorff is a Philadelphia writer.