SMALL-MARKET TV NEEDS HELP IN SAT TV FIGHT

The National Association of Broadcasters may have no bigger cause right now than stopping the merger of its two satellite radio rivals, XM and Sirius.

It's pouring millions of dollars into convincing the Justice Department and the FCC that the deal would be bad for broadcasters, bad for the public.

I wish the NAB luck with that, given all the competitive anxiety satellite radio is causing the AM and FM folks these days.

But there is another deal working its way through the FCC that is of critical importance to many small-market TV broadcasters that is probably getting far less attention from the NAB than it deserves.

It’s the proposed ownership swap involving DirecTV.

Eager to get John Malone our of his business affairs, Rupert Murdoch has proposed giving Malone’s Liberty Media Corp. his 34 percent interest in DirecTV in exchange for Malone’s 16 percent stake in Murdoch’s News Corp.

Murdoch walks away from DirecTV; Malone walks away from NewsCorp. They go their separate ways. Everybody is happy.

Not quite everybody. Feeling neglected by DirecTV, a bunch of small-market broadcasters have asked the FCC to conditioned the deal on DirecTV’s providing local-into-local service in each and every one of the 210 TV markets.

The effort is being led by the four commercial broadcasters in Minot-Bismarck-Dickinson, N.D. (DMA 156). They were first with a petition to deny the deal at the FCC last March.

They say that DirecTV now provides local-into-local service in only 142 markets, the top 127 and 15 random smaller markets. That leaves out 68 markets, including, of course, Minot-Bismarck-Dickinson.

The Minot broadcasters say conditioning the deal on local-into-local service in all 210 markets would promote localism and competition and would make sure rural Americans are not reduced to “second-class citizens.”

And they point out that DirecTV had promised to serve all 210 markets in 2003 when it asked the FCC to OK News Corp.’s acquisition of  a controlling 34 percent interest in DirecTV—the same 34 percent it now wants to shed.

In fact, DirecTV did say that it would “offer a seamless, integrated local channel package in all 210 markets” by the end of 2008.

Nonetheless, DirecTV is resisting any local-into-local conditions on this latest transaction.

DirecTV says that its promise of “seamless, integrated” service did not necessary mean via satellite and points out that the FCC’s January 2004 approval was conditioned only on the DirecTV expanding local-into-local into an additional 30 markets by the end of 2004—a condition it met with two months to spare.

DirecTV point out that it and Echostar combined now serve 177 markets covering approximately 97.6 percent of U.S. TV households. And that percentage will rise as DirecTV goes forward with plans to add eight additional markets, bringing its total coverage to 150 markets.

Rather than providing service to the remaining unserved markets, DirecTV says, its valuable and finite satellite capacity would be better spent providing local HD signals in larger markets.

At present, it says, it offers local HD signals in 57 markets covering 69 percent of the country.

I’ve always been ambivalent about must carry, which is what this really comes down to. The small-market broadcasters want the government to force DirecTV to carry their signals just as local cable operators must.

Cable must carry tends to clog cable systems with religious and home shopping channels that few want to see and takes away room for channels that many might want to see. Satellite must carry would do the same.

But a promise is a promise, especially in the context of ownership applications. DirecTV said it would provide “seamless, integrated’ service to all markets. It ought to do it.

The Minot broadcasters believe DirecTV’s offer of “seamless, integrated” service now means no more than DTV tuners and off-air antennas. That’s far from “seamless” and “integrated.” That is unacceptable.

But there is room for compromise. The broadcasters would likely settle for a phase-in to full local-into-local service—for instance, 175 markets by the end of 2008, 195 by the end of 2010 and all markets by the end of 2012.

The Minot broadcasters have picked up some support along the way. The state broadcasters associations of Mississippi, Michigan, Ohio, Virginia, Maine and Nebraska have all weighed in decrying the absence of local-into-local service in one or more markets.

The two North Dakota Democratic senators—Byron Dorgan and Kent Conrad—have also dutifully rallied to the side of their constituents, sending a letter to FCC Chairman Kevin Martin in support of them.

So far, the NAB has submitted two filings in support—one four pages, the other two. In one of the filings, the NAB says the DirecTV should make good on its 2003 promise, but it stops short of asking for a condition on the grant.

That’s not saying (or doing) much.

The word from the NAB board meeting in Dallas last week was that the board allocated $15,000 to help pay the legal bills of the Minot broadcasters.

The NAB should be applauded for that, but it’s still not enough. It needs to do more.

I hope that the NAB’s less-than-wholehearted support for the small-market broadcasters is due to budgetary concerns, not to large-market members’ tacitly agreeing with DirecTV's strategy of expanding large-market HD service at the expense of small-market SD service.

The Liberty-News Corp.-DirecTV deal has been sitting at the FCC for 260 days now. It’s ripe for action.

At least one commissioner, Jonathan Adelstein, is said to favor conditioning the grant on local-in-local guarantees as he tried to do during the last go-around.

If the NAB were to spend just a bit more money and some of its precious political capital on the issue, the small-market broadcasters might just be able to win enough FCC support to force DirecTV to the bargaining table to work out a phase-in schedule for universal local-into-local service.

That would be a big win not only for small-market broadcasters, but also for the idea that the NAB is an organization that truly represents all broadcasters—from New York City to Glendive, Mont.

Harry A. Jessell is the editor of TVNEWSDAY. If you have a comment on this column, please send him an e-mail at hajessell@tvnewsday.com.