Tube Wars : Satellite Operators Accused of Stealing Viewers

In a bitter turf battle, local television broadcasters are accusing the fast-growing satellite industry of stealing hundreds of thousands of viewers and violating copyright law by indiscriminately selling programming from out-of-town stations.

The two sides have squared off over a 1988 federal copyright law that allows satellite operators to offer out-of-market broadcast feeds only to areas that cannot receive over-the-air signals from local TV stations. Broadcasters, however, say satellite program distributors are violating the law by providing distant TV station programming to more than 500,000 viewers who claimed they could not receive an adequate over-the-air local signal but actually had good reception.

“What has previously been a nuisance as far as local affiliates are concerned has now become a matter of significant economic concern simply by the large number of homes receiving programming by direct broadcast satellites,” said Wade Hargrove, a Raleigh, N.C., attorney who represents ABC and Fox television network affiliates.

“There is not an issue about which network affiliates feel more passionately about,” added Hargrove.

Contending that their local ratings and millions of advertising dollars are at stake, local TV station affiliates in more than 100 markets have challenged the reception rights of at least 500,000 of the nation’s 6 million home satellite dish owners, said William F. Sullivan, general manager of KPAX-TV in Racine, Wis., and past chairman of the CBS affiliates board. Several television broadcasters, including stations in Amarillo, Texas, have brought or are considering filing lawsuits to back up their challenges, industry lawyers say.

Caught in the middle are consumers like Bill Lakin, a Brainerd, Minn., resident, who says he depends on out-of-town stations for news and entertainment because he cannot get adequate local reception.

“It’s not my fault or responsibility that I can’t get a local signal,” Lakin said. “I’ve had a [satellite] dish for 10 years and all of a sudden they want to cut me off because the broadcasters fear they are going to lose advertising.”

Lakin and other viewers from rural and urban areas have flooded lawmakers with complaints about broadcasters’ aggressive enforcement of the copyright law.

Rep. James L. Oberstar (D-Minn.) says he’s gotten more than 30 complaints from constituents in his sparsely populated district. Rep. Rick Boucher (D-Va.) said he has received dozens of complaints as well.

In many cases, Boucher said, broadcaster complaints about satellite operators are warranted.

But he added: “there are very legitimate complaints also from people who live in my district that they cannot get an adequate signal from the local station and yet their reception is being canceled because the local stations are complaining. Most likely this is happening because they live in mountainous terrain which is distorting their television signal. I think it is incumbent upon Congress next session to learn about this problem and enact corrective measures.”

For years, satellite operators, such as PrimeTime 24, Netlink and Primestar, have legitimately packaged and promoted the programs of network-affiliated stations in large East and West Coast cities and sold them to residents in rural areas that could not get good local TV reception.

Some broadcasters in Los Angeles and other large cities benefit from retransmission. Industry sources say it is customary that local broadcast stations carried by satellite operators get compensated based on the number of viewers that subscribe to their station.

The packages proved especially attractive to sports fans seeking to watch faraway teams or to viewers who want to see network TV shows hours earlier or later than their normally scheduled time.

But broadcasters became alarmed about the practice with the introduction, two years ago, of small, 18-inch-diameter satellite dishes that can receive up to 150 channels of video programming and sell for as little as $199. The diminutive dishes have become one of the hottest products in telecommunications among both rural and urban residents, with sales of about 4 million since 1994.

As a result, satellite operators say broadcasters have begun scrutinizing their subscriber lists more carefully and ordering satellite program distributors to cut off service to thousands of subscribers who receive the out-of-town stations.

“We, the distributors, ask all of the relevant questions: ‘Can you get a grade B [TV] signal? Have you been a cable TV subscriber during the past three months?’ ” said Sid Amira, chairman of PrimeTime 24, the New York-based satellite programmer.

“The problem is the way the [law] is written,” Amira explained. “There is no way that the subscriber knows if he has a Grade B signal. And if we were to go out and measure it, it would cost us $150 to $200 per subscriber.”

Last month, broadcasters and satellite industry officials met to try to iron out their differences over the copyright law but the meeting broke down with both sides still at odds.

“There has been little to no resolution of the critical matters,” said Margaret Parone, a vice president at the Satellite Broadcasting & Communications Assn., an Alexandria, Va.-based trade group.

To break the impasse, broadcasters in Texas have turned to the courts. They filed a lawsuit in U.S. District Court in Amarillo seeking injunctive relief and punitive damages against PrimeTime 24, which the broadcasters accuse of providing out-of-market network service to at least 61 Amarillo residents who could allegedly receive an adequate local broadcast signal. PrimeTime 24’s Amira disputed the charges.

But the satellite industry is bracing for more litigation in the wake of station owners’ vow to raise $1 million to hire lawyers.

“The plate is being passed,” NAB spokesman Dennis Wharton said of the fund-raising effort. “Broadcasters are alarmed at the potentially devastating loss of viewers to out-of-region channels.”