DirecTV to Offer Local Broadcast Signals by Year's-End

Alan Breznick

In a big strategic shift, DirecTV Inc. laid out plans last week to offer local broadcast stations to subscribers in New York, Los Angeles and up to 20 other major markets by the end of the year.

DirecTV said it will deliver local signals to markets encompassing roughly 50 million homes, or about half of the nation's TV households, using a new small, dual-feed, dual-receive satellite dish and a new set-top box. Customers will likely pay $5 or $6 a month extra for packages of four to six local channels, similar to what they now pay for packages of distant broadcast networks.

Plans call for DirecTV to start beaming local signals to the New York and Los Angeles markets from its existing orbital slot this summer because it already carries most New York and Los Angeles stations as part of its distant-signal packages. The DBS provider aims to expand to the other markets by the fall if the FCC, as expected, approves its pending purchase of Primestar Inc.'s 11 high-power frequencies and two high-power birds.

"The main thing we're looking at is serving as many homes as we can possibly can," said Eddy Hartenstein, president of DirecTV, who until recently dismissed the idea of using precious DBS spectrum for local signals. "We wouldn't do this if we didn't think it was going to expand the popularity" of DirecTV.

But DirecTV's plans are contingent upon Congress passing favorable local-into-local legislation this spring. While the U.S. House of Representatives overwhelmingly passed a generally favorable bill late last month and sent it to the Senate for approval, DirecTV, EchoStar Communications Corp. and the Satellite Broadcasting & Communications Association object to several provisions promoted by broadcasting lobbyists.

Specifically, satellite TV executives complain that the House bill would force them to phase in full of broadcast stations too quickly, drop distant network signals in too many cases and provide free off-air antennas to some subscribers who lose their distant network signals. They also want stronger guarantees that they won't pay higher retransmission-consent fees to broadcasters than cable operators do.

"We're very concerned that this bill not become a revenue generating bill for broadcasters," said Charlie Ergen, chairman/CEO of EchoStar, at a news conference in Washington, D.C., last week. "Is it Congress' job to only pass what the broadcasters will support?"

Passage of local-into-local legislation would also set up another interesting duel between DirecTV and EchoStar.

EchoStar, which has championed local signals for three years, already offers local signals as premium packages in parts of 13 markets, including New York, Los Angeles, Chicago, Atlanta and Miami. But only customers who can't receive local stations with off-air antennas can get the signals and then they must buy two dishes.

As a result, EchoStar has signed up no more than an estimated 25,000 customers for the local packages and is losing "several million dollars a month" on the service, according to Ergen.