CABL Forum - Satellite Home Viewer Extension and Reauthoriza

There was more reaction to the weekend passage of key satellite TV legislation in the House and Senate, with broadcasters praising the bill and Wall Street pondering the impact the legislation will have on small dish companies.

The legislation contains extensions for satellite TV carriage of distant networks and superstations, and creates a "digital white area" mandate that will allow small dish services to deliver digital distant broadcast networks to viewers who cannot receive a local digital or high-def signal. The bill also requires EchoStar to cease within 18 months is use of a solution that splits up channels for some markets between two dishes.

Sen. John McCain, the Arizona Republican and outgoing chairman of the Senate Commerce Committee, expressed support Monday for passage of the Satellite Home Viewer Extension and Reauthorization Act of 2004. "I am pleased that, with passage of this bill, Americans who are unable to receive a network television station over-the-air, often those who live in rural areas, will continue to be able to enjoy network programming via satellite."

He added, "I am pleased that passage of this bill will, for the first time, ensure that these same Americans can enjoy digital high-definition television programming via satellite, even if they are unable to receive the broadcast signal over-the-air."

Edward Fritts, president and CEO of the National Association of Broadcasters, said in a statement: "Congress has hit the trifecta by passing a pro-consumer bill that enhances broadcast localism, slams the door on EchoStar's abusive two dish practice that discriminates against Hispanic and religious TV viewers, and thwarts efforts to establish 'digital white areas.' We salute Congressional leaders for recognizing the enduring value that local television stations provide to the viewing public."

Tom Watts of Oppenheimer and Co. said EchoStar's customer conversion of its two-dish local TV solution will cost the company up to $100 million, including the cost to send out new dishes to consumers in markets where a two-dish solution exists. Watts said the bill has no real impact on DirecTV, except for the fact that it may benefit from the ability to transmit distant high-def signals.

Craig Moffett of Bernstein Research said while EchoStar's conversion of two-dish customers will cost the company millions of dollars, "The real cost is likely to come from higher churn in those markets, given the inevitable disruption," he said. "Nevertheless, the 18 month timeframe is a decided improvement from the House version's 12 month transition."

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Satellite Home Viewer Extension and Reauthoriza