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SBCA Bids Goodbye to Its President

Nashville, Tenn.— On the eve of last week's annual Satellite Broadcasting & Communications Association convention here, the trade group's board accepted the resignation of president Chuck Hewitt, an 18-year-veteran of the group and its predecessor organization, SPACE.

Senior vice president Andy Paul, who joined the SBCA 11 years ago, also resigned.

"It is going to be very difficult for Andy and myself to leave, but it is time," Hewitt said last Thursday.

Andy Wright stepped in last Wednesday as the association's acting president. He's also considered a top candidate in the search for Hewitt's replacement.

Hewitt will help the search committee and work with the SBCA as a consultant into 2002.

The moves come amid upheaval in the satellite industry, most notably the likely change in DirecTV Inc.'s ownership. DirecTV CEO Eddy Hartenstein acknowledged last Thursday that parent General Motors Corp. was "rounding the corner" in its negotiations to merge Hughes Electronics Corp. with News Corp.'s SkyGlobal Networks division, but stressed that the deal has not been finalized.

As industry officials noted last week, change has been the only constant in the industry since the first home satellite dish was erected 25 years ago.

During his tenure, Hewitt had to shift the association's focus several times, moving from C-band satellite system equipment manufacturers in the days of free satellite-TV signals in the 1980s to programmers after Home Box Office started scrambling its satellite signal in 1986.

"We had to fight battles in the '80s that if we hadn't won, who knows if we would have direct-broadcast satellite today," Hewitt said, noting that the industry had to fight even for consumers' right to own home satellite dishes.

In the early 1990s, the focus was on retailers, who were encouraged to embrace change as the industry moved to smaller-dish satellite system sales.

Since the mid-1990s, the SBCA's DBS-provider ranks have thinned from five companies to two — DirecTV and EchoStar Communications Corp. — and much of the independent retail base has eroded as dealer profits fell and DBS providers looked to attract national consumer-electronics chains.

Last week, Hewitt told independent dealers during a keynote address that their SBCA membership dollars were more important now than ever, as the industry looks to fight must-carry and new taxes on satellite services in 22 states. It's when industries grow and become successful that government tends to take a closer look at regulating them, he warned.

Hewitt said other television-industry trade groups — such as the National Cable & Telecommunications Association and the National Association of Broadcasters — devote much more money to political-action committees, soft money and outside legal counsel than the SBCA does.

At a press conference last Thursday, Wright said that it was too early to say what the SBCA would do to help boost funding.

Although it's a problem that dates back to the 1980s, signal theft has once again emerged as a top issue among satellite providers. The topic was a hot one during last week's show, following a Tuesday report in The Wall Street Journal
that DirecTV plans to sue consumers who refuse to stop pirating its programming.

Last month, DirecTV began sending letters from its attorneys to suspected pirates asking them to call the lawyers to arrange a settlement, according to DirecTV vice president of signal integrity Larry Rissler.

Depending on the response from the pirates, statutory damages can range from $1,000 to $10,000, Rissler said.

For current DirecTV subscribers who pay for some programming networks but steal others — such as pay-per-view or out-of-market sports — the settlement is $500 if the subscriber signs up for a year of a higher-end programming package and agrees never to pilfer DBS programming again, Rissler added.

"Every dealer and distributor has to support DirecTV [Inc.] and Dish [Network] in their efforts to eradicate this terrible cancer" of piracy, Hewitt said in his keynote address.

DirecTV CEO Eddy Hartenstein was more direct in his comments to satellite dealers who traffic in pirated smart cards.

"My advice to anyone involved in signal theft is get out of it now, or you're going to have a lot of trouble," Hartenstein said.

In a press conference, EchoStar Communications Corp. chairman Charlie Ergen suggested that DirecTV wasn't doing enough to combat piracy.

"You can't be serious about piracy until you change out the smart cards," Ergen said.

Earlier, in a rare moment of industry unity, DBS rivals Hartenstein and Ergen briefly shared a stage Thursday morning to join others in paying tribute to Hewitt.

"It may come as a surprise to some of you, but our industry members don't always get along," Wright quipped, moments before praising Hewitt's ability to find consensus among the competitors.

Ergen told reporters last Thursday that he's hopeful News chairman Rupert Murdoch would be able to make SBCA-related decisions more quickly than DirecTV's current management can, suggesting that approvals from DirecTV often had to wind their way to GM's headquarters in Detroit before things could move forward.

Murdoch will make the synergies of the merger clear once the deal is signed, Ergen predicted.

"I'm sure those synergies will be logical," he added, "because he always is."

Hartenstein acknowledged that antitrust concerns over a potential DirecTV-EchoStar merger were "clearly an issue" in the company's decision to concentrate its negotiation efforts on SkyGlobal, rather than adding EchoStar to the mix.