WASHINGTON — After failing, at least for now, to get legislative or judicial relief from a federal court order to stop providing network television programming to some of its customers, Echo Star Communications Corp. began shutting off the service to about 800,000 affected subscribers Nov. 30, according to David Moskowitz, the company’s executive vice president and general counsel.
EchoStar and DirecTV, the two main competitors in the U.S. direct-to-home satellite television market, are both permitted under U.S. law to transmit national broadcast channels to customers who cannot get the national programming from a local broadcast affiliate. One way to do that is to transmit the national programming from other local affiliates outside that customer’s normal broadcast area, a service known in the industry as an out-of-market network feed.
EchoStar is accused in a lawsuit by the major U.S. networks ABC, Fox, NBC and CBS of ignoring this caveat and sending some customers the programming of network affiliates in other areas even when those customers have a local network affiliate.
The U.S. District Court in Miami issued an injunction Oct. 20 ordering Englewood, Colo.-based EchoStar to stop by Dec. 1 providing about 800,000 customers with out-of-market network feeds. Although EchoStar initially had reached settlements with all the networks except Fox, which like EchoStar competitor DirecTV is owned by News Corp., they were ordered to halt the practice by the deadline. The other networks later backed out of their settlements.
EchoStar’s attempts to get an extension were unsuccessful, Moskowitz said, and though the company is appealing the decision to the U.S. Supreme Court, a hearing will not come in time to prevent the loss of the network feed to those 800,000 customers.
Also coming too late was legislation introduced in the U.S. Senate Nov. 16. Sens. Wayne Allard (R-Colo.), and Patrick Leahy, (D-Vt.) and several co-sponsors from both major U.S. political parties introduced a bill Nov. 16 called the Satellite Consumer Protection Act of 2006 (S. 4067) that is designed to allow the company to broadcast the programming to customers that cannot get it by other means. But because of Congress’s holiday recess, which extends until Dec. 4, the legislation did not have the chance to proceed before the court order went into effect Dec. 1. David Carle, Leahy’s press secretary, said Nov. 21 that the Senate hopes to pass the bill in December before the conclusion of Congress’s lame duck session. No companion legislation is planned right now in the House, though Carle said Leahy has been working with House leadership on the issue.
EchoStar spokeswoman Kathie Gonzalez said in a phone interview Nov. 21 that while EchoStar broadcasts the signals to customers who subscribe to the distant network service, many of those receive network programming that originates locally, so they will not be negatively affected by the decision. The company intends to provide antennas for customers to pick up the signal through the airwaves, and is looking at other mitigating measures as well, she said.
Another possible arrangement would be a partnership between EchoStar and a third party that would provide the service, Moskowitz said. The company has an agreement to partner with All American Satellite Sales and Service Inc., of Lone Jack, Mo., but the broadcast network affiliates are challenging this arrangement in court as well. Moskowitz said a decision on the matter from U.S. District Court in Miami could come in the next few days.
In the meantime, Gonzalez said the company hopes that congressional intervention will halt the injunction later in December, though they are realistic that the legislation may not be passed during Congress’ lame duck session. Gonzelez declined to say how much revenue loss EchoStar could experience from the court decision.
Under the legislation, a satellite provider would be granted a statutory license to broadcast the network material, and needs to meet certain requirements such as proving that the households receiving it are underserved. If it fails to meet the restrictions of the license, the satellite provider can be fined, the legislation said.
The Senate’s move came under fire from the National Association of Broadcasters (NAB).
“NAB strongly opposes a bail-out by Congress of a habitual copyright infringer that has skimmed millions of dollars infringing copyrights and violating the law on a nationwide basis for eight years or more,” NAB spokesman Dennis Wharton said in a prepared statement Nov. 22. “The fact is consumers will not lose access to broadcast network programming when the court decision goes into effect. Consumers have a variety of easy options to receive broadcast network programming.”
In response to the NAB’s opposition on the issue, EchoS tar issued the following statement Nov. 30: “Echo Star has worked diligently to make sure consumers have a choice of distant network signals. We reached a $100 million settlement that was accepted and later rejected by the broadcasters, yet they continue to bully consumers and the courts. We are hopeful the courts will see through the Fox Network-led coalition of broadcasters, whose real intention is to deny consumers their freedom of choice and leave the Fox-owned DirecTV as a monopoly for distant networks,” EchoS tar said in a statement issued Nov. 30.
Competitor DirecTV of El Segundo, Calif., which is still eligible to broadcast to the underserved customers, was quick to act on the decision, putting an advertisement on their home page noting the court decision and outlining how Dish network customers could jump ship to DirecTV to receive network programming. The company linked to search engines allowing customers to look up whether local channels are available in their area, and is offering a $100 discount for customers who subscribe to the DirecTV programming.
