LTVS PLANS TO FILL MUST-CARRY VOID LEFT BY DBS OPERATORS
Start-up DBS company Local TV on Satellite (LTVS) is hoping must-carry court fight (CD Aug 9 p1) involving broadcasters, DBS operators and federal govt. boosts its proposed service. Satellite interests haven’t paid much attention to small Raleigh satellite operator, which hopes to offer each of 1,600 full-power local stations exclusively in 210 U.S. markets via satellite, industry sources said. LTVS, which plans to roll out its system in 4 phases, believes it may offer remedy for DBS must-carry problems. Americans don’t want just access to major network local affiliates via DBS, LTVS spokesman said, but also want independents and other networks: “You can’t see a popular show like Buffy The Vampire. There’s no UPN. Must-carry is an important tool for satellites to compete more effectively with cable.”
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
LTVS plans at start to deliver local TV signals via leased transponders at low-bit rates, Pres. John Hutchinson said. Later it will add spot beams and satellites in co-orbital positions, allowing graceful migration to higher bit rates, he said: “Our picture will be as good as EchoStar or DirecTV.” Eventually, LTVS plans to utilize 4 satellites in 2 orbital locations. At end of 4 stages of development, all 1,600 stations will be able to receive signals, spokesman said: “We can add satellites and expand service quickly.”
Hutchinson refused to say how much money he had raised for venture, but said LTVS didn’t need FCC approval because it was using partnerships with undisclosed strategic partners in satellite industry that he said he couldn’t name because of “confidentiality” clauses in contracts. “We have a financial plan that has been worked through” by investment firm: “We feel very good about viability and debt financing. We have strategic partners and different vendors.”
DBS leaders say DBS carriage rules implemented by FCC as part of 1999 Satellite Home Viewer Improvement Act are unfair because they eat up valuable satellite capacity and hurt their ability to provide service beyond top 40 markets. Retransmission disputes, signal quality and financial impact of new rules that must be implemented by Jan. 1 are among factors that have led to court fight in which DBS companies, backed by Satellite Bcstg. & Communications Assn., will present oral argument on constitutionality of must-carry rules Sept. 24 in 4th U.S. Appeals Court, Richmond. Broadcasters oppose changes in current rules.
Meanwhile, Hutchinson continues to tout service as solution and “complement” for DBS industry, but said he had no firm commitments or deals with DBS operators. Fate of company may depend on whether DBS company buys into idea, satellite analysts said. “Right now, nobody is talking about it, but things can improve if DBS loses the must-carry fight,” one analyst said. Hutchinson attempted to drum up support for company at SBCA Convention Aug. 2-4 in Nashville. DirecTV spokesman and EchoStar spokeswoman said discussions with company hadn’t gone beyond initial stage. “We spoke with them,” DirecTV spokesman said: “We were somewhat compelled by what they offer, but we are launching our own spot beam satellite.” EchoStar spokeswoman admitted “meeting and talking with them,” but beyond that, “I can’t tell you anything.”
Hutchinson told us that DBS companies could free up capacity for pay TV and other channels by signing up with LTVS. DBS subscribers would be charged fee for service, much like they are for networks such as HBO and ESPN. He said EchoStar and DirecTV currently were charging $5.99 for local service and there would be no major service adjustments. DBS subscribers would receive LTVS signals through existing dishes and fees would be built into DBS bills. “It’s simple and easy process,” Hutchinson said. He didn’t say whether DBS operators would be charged fee or receive percentage of revenue.
“By our calculations,” DBS industry lacks capacity to extend much deeper than top 40 markets, Hutchinson said: “We believe 40% of households will be unserved. That’s where we plan to pick up - - from [markets] 41 to 210. That would provide much-needed service to rural areas.” He said rural markets were “going to be clear focus” because EchoStar and DirecTV hadn’t done much to serve those areas with local TV signals.
Hutchinson believes LTVS gives broadcasters and DBS operators “everything they want” and 500 broadcasters had signed letters of support for his service. He said DBS companies were more concerned about what “this does for profit margins, subscriber acquisition.” When local-into-local is involved, there’s “drastic jump” for DBS in uptake rates, he said.
When LTVS started 3 years ago, “there was great deal of skepticism” Hutchinson said, but technology has been backed by “technical experts” at Boeing, GE Americom, Hughes. Result has been “quick-start rural plan” that actually could get what he expects eventually to be $1 billion operation once it’s built up and running by 2003, but more likely in 2004, he said.