I want my satellite TV; the government's television grab - government policy on network television

Reason, April, 1999 by Michael W. Lynch

Bud Smith is all worked up. "I won't go back," he insists. "I'm not about to - in no way, shape, or form - put up a 1950s antenna." And, he promises in an accent that recalls Ross Perot's, "I'm not going to buy into cable. There's a ghost in it and the sound's not good."

Smith lives in Port St. Lucie, Florida, where TV reception is poor and the area's high winds, lightning storms, and corrosive salt air constitute good arguments against erecting a 30-foot antenna over his home. That's why, in 1985, he bought a satellite dish - one of the big ones. As a result, he was able at last to pull down clear programming. Today, Smith pays his satellite company, PrimeTime 24, $17 a month for about 20 stations of his choosing, including network feeds off both the East and West Coasts, A&E, and three Showtimes.

But unless Congress acts soon, the government will take network television from Smith and approximately 2.2 million other people by the end of April. The reason: Smith is bypassing the local network affiliates. The government offers him two options: Buy cable TV or install a TV antenna. But Smith, a retired federal civil servant, thinks his own solution - keeping his satellite dish - is a whole lot better.

Congress and the Federal Communications Commission have long pursued their notions of "the public interest" in broadcasting, requiring plenty of restrictions. The government, for example, sets the price at which program copyright holders must sell to cable and satellite distributors, forces cable systems to carry all local broadcasting, and prevents satellite companies from delivering the same local programming. It's complicated terrain where each interest, except the consumer, has a fief.

There is, however, a small exception for satellite companies that puts them in direct competition with both cable and local TV. Under the 1988 Satellite Home Viewer Act (SHVA), satellite companies, while prohibited from distributing local programming, are allowed to deliver distant network affiliates to people who are unable to receive local, over-the-air network signals and who haven't subscribed to cable in 90 days. But Congress and the FCC never established a precise procedure for determining who was "unserved" by the networks. Satellite companies like Smith's PrimeTime 24 signed up people who claimed they couldn't get good reception, and before long they had more than 2 million customers.

Network affiliates, who have franchise agreements with the networks, consider this unfair. Last July, a Fox station and an NBC affiliate in Florida convinced a federal judge that it was illegal under the SHVA. The judge issued an injunction against PrimeTime 24 that will soon take effect.

At the core of the controversy lies simple protectionism for the broadcast and cable industries. After all, why shouldn't Smith, who used to live in Los Angeles, be able to buy West Coast TV feeds? Why shouldn't my own West Coast godparents, early risers both, be able to get the day's news, weather, sitcoms, and sports on an East Coast schedule, provided the owners of the programming are willing to sell it? And why shouldn't a TV consumer who lives between the two coasts be able to buy whatever she wants, including local affiliate programming, over her satellite?

Why? Because consumers who want to make such choices threaten "the public interest," according to Dennis Wharton, a spokesman for the National Association of Broadcasters. By circumventing the local television cartel (local network affiliates and cable TV), people who make such decisions deprive stations of ad revenue. Such seemingly private harm could precipitate a public calamity, Wharton warns, because local affiliates are the cornerstone of "localism and free over-the-air television." Says Wharton, "For years, the hallmark of American television has been the network-affiliate relationship. If you have 20 to 30 percent of your customers starting to leak off, and they are getting their signals from New York, that is very damaging to the network-affiliate relationship."

But TV viewers don't care. Today, 78 percent of American households buy their television, mostly through cable companies (with whom they have a love-hate relationship). These consumers want more choice, not less. And they aren't likely to stand by while the government protects industry interests at their expense.

PrimeTime 24 informed customers like Smith that, "due to circumstances beyond our control, we must terminate the NBC service you receive." Since then, congressional offices have received thousands of letters and calls of protest.

Smith, like many other satellite subscribers, did two things. First, he wrote to his local network affiliates asking each for a waiver - a signed letter permitting him not to consume their product. The ABC affiliate responded by advising him to "purchase and install an over-the-air antenna," or "purchase a basic 'lifeline' cable service that provides local broadcast." The NBC affiliate had the same advice. Then Smith fired off letters to each federal and state elected official for whom he can cast a vote.