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Sat Bill Deep-Sixes Double Dish

Congress has handed broadcasters a lobbying victory in the year-long battle over renewing satellite-TV providers' right to carry local TV stations.

Late Saturday lawmakers passed legislation giving direct broadcast satellite operators the right to carry local TV stations for another five years. That part wasn’t controversial, but broadcasters and DBS carriers have been battling over controversial side issues since January. The provision was tucked into a massive spending bill lawmakers approved before leaving Washington for the Thanksgiving holiday.

Prompted by complaints from the National Association of Broadcasters, Congress ordered satellite TV provider Echostar to end within 18 months a practice that required many subscribers to install two dish antennas in order to receive all the local TV stations in their market.

Under Echostar’s current practice, affiliates of the major networks are typically available on the same dish as popular pay-TV channels while other stations in the market are relegated to the second antennas, which many subscribers don’t bother to install. Broadcasters say the practice unfairly hurts lower rated stations and violates the spirit if not the letter of the carry one, carry all requirement (If a satellite carrier elects to carry any local station in a market, it must provide all).

Echostar officials, however, complained that the legislation "inappropriately singled out" their company because it will have to spend hundreds of millions to move local channels to its main satellite.

In another defeat for Echostar, Congress rejected the company’s request to begin importing broadcast networks’ high-definition versions of Monday Night Football and other network shows from far away markets to any viewers who can’t get HD versions from their local affiliate. Echostar argues that many local stations have been too slow to roll out digital programming to their entire coverage area and DBS offers a chance to bring network HD to those customers right now.

Satellite companies already have the right to import distant analog network signals to subscribers who can't receive a sufficient-quality over the air signal.

Many local broadcasters are not reaching their entire coverage area with a digital signal because they have been transmitting DTV at low power levels. The FCC permitted the power cut to help stations save on utility costs until large numbers of consumers have acquired sets capable of receiving digital signals.

Congress did give DBS companies some small consolation. Over the next 18 months to three years, TV stations face deadlines for serving their entire market with digital. If any network affiliate fails to meet its deadline, a neglected viewer can order a DBS package that includes an imported version of the network signal.

Still, a DBS provider has some hurdles to clear even then. First it must already be providing local channels in an analog format, but not yet providing local channels in digital. Second, measurements of the broadcasters’ signal taken from the subscribers’ home must prove an acceptable digital signal isn’t available (broadcasters have complained that DBS companies are playing fast and loose with those measurements in analog delivering signals to homes that can receive a quality over-the-air signal). Finally, DBS providers must pay a higher royalty rate for imported signals than they do for local versions and must import a signal from a station in the same time zone.

Although the provision fell far short of Echostar’s request, the company praised lawmakers for approving a "forward-thinking" remedy for getting digital to unserved customers.

Despite the legislative disappointment, the measure could help Echostar's business in the long run, says Sanford Bernstein analyst Craig Moffett. That's because Echostar ultimately hopes to convince as many customers as possible to get their local digital channels directly from the broadcasters, thus saving satellite capacity for pay-TV programming.