Networks, DirecTV Settle Turf War---For Now

According to the March 15 edition of The Wall Street Journal, satellite broadcaster DirecTV will stop beaming network signals to ineligible customers and offer to install terrestrial antennas at a discount as part of an agreement reached with several TV networks. The satellite service has been wrangling with four major networks---ABC, CBS, NBC and Fox---over rights to deliver network programming to customers in areas served by local broadcasters.

Last month, after complaints by the networks that DirecTV was illegally distributing their signals, a federal judge in Miami ordered the satellite service to immediately block CBS and Fox signals to about 700,000 customers. An additional 1.5 million subscribers were facing an April 30 shutoff. Congress then revised the process after several hundred thousand households lost access to some broadcast shows. Most DirecTV customers will lose network programs from their satellite receiver in June, with the rest to follow by the end of the year. This gives DirecTV time to install the antennas.

At the heart of the turf war is a complicated Federal Communications Commission test for determining whether over-the-air signals are viewable or not. The contested area is the so-called "Grade B contour" around an earthly transmission tower where 50% of the residents can receive viewable signals 50% of the time. The National Rural Telecommunications Cooperative weighed in on the side of the satellite providers, asking that Grade B contours be redefined as areas where 100% of the population can receive clear signals 100% of the time.

Using FCC guidelines, the networks claim that signal strength is sufficient in many rural and semi-rural locations to receive over-the-air programming, and DirecTV is operating outside its jurisdiction---thereby threatening the ad revenue of the networks' local affiliates. New antennas supplied to satellite subscribers in these marginal areas might enable them to receive signals from local TV stations. Customers in remote locations (outside Grade B contours) will continue to receive network programming via satellite. The agreement is seen as a model for how other direct satellite broadcasters will deal with the networks.

National Association of Broadcasters President Eddie Fritts called the settlement a "consumer-friendly marketplace agreement." DirecTV will lobby for a congressional effort to revise the FCC's standard, possibly in conjunction with a communications bill being drafted by Sen. John McCain (R-AZ). McCain is chairman of the Senate Commerce Committee.