HOUSE JUDICIARY SUBCOMMITTEE MOVES SHVIA REAUTHORIZATION

Smith, however, acknowledged that more work needed to be done to achieve parity between cable and DBS and said Congress could work on that issue in the future. He cited important steps the subcommittee version of the bill would accomplish: (1) Guarantee satellite subscribers the choice of continuing to receive distant signals another 5 years. (2) Strengthen the satellite industry by enabling it to deliver significantly-viewed distant signals to subscribers on a copyright royalty-free basis, which he said was similar to rules that cable providers enjoy. (3) Ensure that copyright owners get a process for adjusting their royalties, which have been fixed since Congress reduced the rates in 1999. (4) Lay the groundwork for a future Congress to address the complex issues involving the potential harmonization of the cable and satellite compulsory licenses. Smith told reporters that it was important to “pass legislation the Senate will accept.”

The bill would recalculate royalty rates based on cost- of-living adjustments since 1999, SBCA said, and then require a Copyright Arbitration Royalty Panel (CARP) to determine fair market value for distant signals. SBCA said the system would put DBS at a “further competitive disadvantage” by calculating DBS rates by market value while cable rates are adjusted only for inflation. “This type of one-sided increase is anti-competitive,” said Richard DalBello, SBCA pres. “If Congress’s goal is to ensure that consumers have an affordable alternative for multi-channel video then they need to -- at the very least -- come up with a uniform system of evaluating increases for both the cable and satellite industries. The satellite industry currently pays higher royalty rates and yet we still manage to offer our consumers service at prices that are often cheaper than our cable competitors.”

But Smith said such a “uniform system” would be too difficult for Congress to develop before SHVIA expires. “Some will object that the [bill] does not go far enough in establishing absolute parity with the cable industry,” he said. “But our purpose is not to embark on an exercise that cannot be completed without a comprehensive examination of the 2 industries. There is neither time this session nor sufficient objective information for this Congress to attempt such a complex task.” Smith told reporters afterward it’s difficult to compare cable with DBS.

Rep. Boucher (D-Va.) said he was concerned about applying CARP rates to DBS, especially since there were efforts to reform CARP procedures. He said the CARP system was “deeply flawed” and it’s unlikely that HR-1417, Smith’s bill to reform CARP, would be enacted before DBS rates would be subject to the system. He said he foresaw a “rather significant jump” in rates DBS must pay if subject to the current CARP system, which would likely create a “worsening disparity.” “I don’t think that’s fair,” he said. Boucher proposed a “simpler and fairer” approach where annual inflation adjustments would be applied to the rates. Rep. Lofgren (D-Cal.) also had concerns that the bill would raise DBS rates for consumers. “If constituents see a huge increase, members will hear about it,” she said.

Boucher also said he and Rep. Goodlatte (R-Va.) were working on an amendment that would “pave the way” for local- to-local to be introduced in every U.S. TV market. He didn’t elaborate. And Rep. Forbes (R-Va.) said he would like to see more cooperation from the satellite industry to curtail the spread of pornography channels on DBS.

The bill didn’t address the issues brought forth in the Commerce Committee version, and Smith said the 2 versions would eventually be merged. One issue that could be addressed when the full Commerce Committee considers the bill is an “a la carte” amendment for DBS proposed by Rep. Deal (R-Ga.) (CD May 6 p6). And while House Judiciary ranking Democrat Conyers (Mich.) didn’t addressed the proposed Deal amendment in the markup Thurs., he did use a written statement to denounce the amendment. Conyers said the amendment would “limit minority-owned stations.” “Fundamental to the successful launch of continued viability of cable televisions stations which seek to represent minority viewpoints, such as channels that promote news and entertainment from an African American perspective or a fundamentalist Christian perspective, is the continued ability to bundle those stations with other stations having broader appeal,” Conyers said. “Without the ability of these vital community voices to grow an audience and become a self- sustaining channel through the use of bundling, the airwaves will literally be surrendered to the wealthiest media conglomerates representing only majority viewpoints.”

Meanwhile, NAB sent a letter to Senate Commerce Committee Chmn. McCain (R-Ariz.) and ranking Democrat Hollings (S.C.) disputing statements by EchoStar CEO Charlie Ergen during the Tues. hearing on SHVIA (CD May 5 p9). NAB said Ergen claimed that the 2-dish policy was consistent with SHVIA’s “carry one, carry all” requirement and that 2-dish was a compromise between DBS and the local TV broadcast industry. NAB said EchoStar didn’t tout its 2-dish policy in 1999 when negotiations for SHVIA were underway, and NAB immediately challenged EchoStar once it began its 2-dish policy.

Also, the Senate Judiciary Committee scheduled a SHVIA hearing 10 a.m. May 12, 226 Dirksen Bldg.