It's good to see Divi cutomers getting Gov't support
U.S. Congress Aims to Pass Laws Boosting Satellite TV in 1999
Washington, Dec. 31 (Bloomberg) -- Hughes Electronics Corp.'s DirecTV, EchoStar Communications Corp. and other satellite broadcasters will get help from the U.S. Congress next year in their battle with cable rivals for the $43.6-billion-a- year subscription television business, analysts said.
Senate Commerce Committee Chairman John McCain, an Arizona Republican, plans to push a bill to allow satellite companies to broadcast local stations, as cable television can. Currently, the law bars them from doing so, except in rural or other areas where viewers can't get the local signals using an antenna.
Lawmakers want to appease irate consumers by loosening cable's grip on its 70 million subscribers. Cable rates rose an average of more than 7 percent in 1998 and cable price deregulation begins March 31.
''Congress wants to act quickly,'' said Melinda Mullet, director of regulatory affairs for Arthur Andersen LLP's communications practice. The satellite television industry, with 10 million subscribers, is the most likely near-term competitor to cable TV companies such as Time Warner Inc.
Congress also plans several other initiatives to encourage competition for cable TV. They are:
The rollback of a recent government ruling increasing the copyright fees satellite broadcasters must pay. The ruling puts them at a competitive disadvantage because they pay 900 percent more than their cable competitors for the right to air the same programs.
Continuation of a system that keeps satellite companies from having to negotiate copyright royalty fees with individual TV programmers. Under the system, scheduled to expire next year, satellite companies pay copyright royalty fees based on number of subscribers and type of programming to the U.S. Copyright Office, which then distributes the money to program owners.
Disadvantaged
Currently satellite TV customers who want to watch local TV signals must use a standard roof-top antenna, or buy cable service as well.
''The number one reason consumers decline to give Direct Broadcast Satellite providers a second look is because it doesn't offer local channels,'' said Charlie Ergen, Echostar chairman and chief executive.
Satellite broadcasters are further restricted because they're only allowed to broadcast network-affiliate programming from distant markets if a customer can't get local stations using a roof-top antenna because of terrain, buildings or other problems.
The satellite broadcast industry has ''been disadvantaged compared to cable'' in part because of these restrictions, said Chuck Hewitt, president of the Satellite Broadcasting and Communications Association.
Even facing regulatory hurdles, satellite television is gaining ground, according to a new FCC report. Satellite's share of the home subscription television market rose to 9.4 percent from 7 percent last year, while cable's share of the market fell 2 percentage points to 85 percent.
Cable companies say they aren't against satellite TV companies obtaining the local station rights as long as they operate with the same regulatory requirement to carry all stations.
''We have no objection to Congress providing for local-into- local broadcasts as long as the satellite providers have the same obligations to carry all broadcasters as we do,'' said Michael Luftman, a Time Warner Cable spokesman.
Investment Performance
From an investor standpoint, EchoStar's performance -- its shares rose 182 percent in 1998, through Dec. 30 -- will be ''difficult to duplicate'' in 1999, though favorable treatment in Washington could give the industry a boost, said George Reed Dellinger, with HSBC Washington Analysis.
General Motors Corp.'s Hughes Electronics, which owns DirecTV, the No. 1 satellite-TV company, didn't fare as well with investors in 1998, rising 3 percent. That company suffered from issues such as satellite glitches and scrutiny of the company's technology transfers to China, Dellinger said.
Bloomberg LP, the parent company of Bloomberg News, provides programming for DirecTV and EchoStar.
It also will be hard for the cable industry ''to repeat the stellar performance it had in 1998,'' Dellinger said. The shares of Time Warner, the No. 1 cable company, rose 96 percent in 1998. Shares of Tele-Communications Inc., the No. 2 company, rose 97 percent.
FCC Agenda
09:07:28 12/31/1998
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