Directv Blends With The Locals Directv Blends With The Locals / But Must-carry Rule Present...

Applying political pressure to the FCC and Congress, DirecTV has announced that it will begin offering local-to-local coverage of local stations to about half the country -- or about 50 million homes -- beginning as early as this summer (HR 5/5).

But the offer is contingent on Congress approving legislation that either removes any must-carry provisions for satellite programmers or extends by several years the transition period in which satellite companies must go from providing the top broadcast networks in each market to relaying every over-the-air broadcast channel in each market served.

It is also contingent on the FCC approving DirecTV's purchase of the Tempo high-power satellites that were connected with Tele-Communications Inc. and the Primestar service.

Last month, the House of Representatives approved a bill that would allow satellite TV companies to offer local channels into local markets beginning immediately, but a must-carry provision requires carriage of all local channels by Jan. 1, 2002.

DirecTV competitor EchoStar has been fighting vigorously to get the must-carry provision removed because of the enormous number of channels it would require to cover the country. DirecTV, which has heretofore stayed out of the battle -- insisting that local channels could easily be integrated into DirecTV system with a traditional over-the-air rooftop antenna -- is joining that fight.

"The overall dynamics of the business have changed dramatically in the past six months," DirecTV spokesman Bob Marsocci said. In addition to DirecTV buying competitors Primestar and U.S. Satellite Broadcasting, Congress has become more receptive to easing restrictions on satellite companies.

In reference to the timing of DirecTV's announcement Wednesday, Marsocci said the company is trying to help continue the momentum that has been built in Washington and push for as much consumer-friendly legislation as possible.

That momentum has been built almost entirely by EchoStar chairman Charlie Ergen, who responded to the news Wednesday while in Washington. "I think if you're getting run out of town, you get in front of it and make it look like a parade."

But he said it would be helpful to finally have the help of market leader DirecTV in lobbying legislators.

"One of our disadvantages in fighting for the legislation is we were not united. Now DirecTV and EchoStar are 99.9% on the same page."

In reference to the position reversal by DirecTV president Eddy Hartenstein, Carmel Group chairman and CEO Jimmy Schaeffler said, "A wise man changes his mind often, a fool never."

Schaeffler said the addition of even the four top broadcast networks could attract tens of thousands of new subscribers in New York and Los Angeles, the two markets that would be first to get the new service.

At anticipated pricing of about $6 or $7, the local channels would be less expensive than the most basic cable fees for local channels, which average about $11, Schaeffler said.

The addition of all local channels could mean hundreds of thousands of new subscribers, he said. But no matter what happens in Congress, Schaeffler believes that DirecTV will add local signals in Los Angeles and New York.

DirecTV recently added the ABC, CBS and NBC affiliates in New York and Los Angeles and the Fox affiliate in New York for all DirecTV subscribers across the country who cannot receive any local broadcast signal in their area.

Marsocci said with appropriate legislation, DirecTV would likely add the Fox affiliate in Los Angeles and perhaps two or three additional major independent stations in both cities with the introduction of the local-to-local service.

Additional markets added by DirecTV later this year would be delivered by the new Tempo satellites at a different orbital location, meaning that existing customers would have to buy new satellite rooftop antennas and set-top receiver boxes capable of picking up signals from the current and new satellites.

Marsocci said if DirecTV is not restricted by must-carry, it could offer at least the top four broadcast networks in more than the top 20 markets in the United States.

DirecTV is also planning to soon introduce new set-top boxes that will integrate new digital over-the-air signals of local broadcasters that consumers can receive through a traditional antenna.

Brooks Boliek in Washington contributed to this report.