Capital Watch

News Corp. owner Rupert Murdoch has hired two former FCC aides only months after their former boss did the company a big favor.

Susan Eid, ex-media adviser to FCC Chairman Michael Powell, was picked to run the government-affairs shop for DirecTV and Hughes, replacing longtime lobbyist Merrill Spiegel. Eid worked for Powell during the FCC's review of broadcast-ownership rules, which benefited Murdoch's Fox Television Group by eliminating a standing order to sell some stations. Eid left Powell's office in July.

Murdoch also hired Paul Jackson, another ex-Powell aide, to be a lobbyist for News Corp. itself. Of late, Jackson has been the FCC's congressional lobbyist.

EchoStar just got a boost in its fight to carry more digital channels from network superstations and exclude local affiliates. Last week, the feds' top copyright official said the government's measuring stick for deciding when viewers get a good local signal won't work for digital.

How does that help EchoStar? The satellite provider is allowed to import superstations from out-of-town markets when the local affiliates don't offer a good signal. With many local stations offering digital at reduced power, EchoStar wants Congress to declare more homes eligible for digital superstations than are eligible for analog imports today. With the Copyright Office telling Congress a digital measurement must be designed, lawmakers can't ignore the issue, and EchoStar has a chance to tweak changes in its favor.

FCC Chairman Michael Powell is pulling a fast one to help Fox, CBS, Paxson, and Sinclair keep giant station groups intact, charge FCC Democrats. Commissioners Michael Copps (above, left) and Jonathan Adelstein (right) derided Powell's plan to review the "UHF discount" as a ruse to persuade federal judges to dismiss lawsuits against the 20-year-old rule. The rule allows some companies to run bigger groups than allowed by the 39% cap on an owner's national TV-household reach.

The Democrats say Powell should have eliminated the discount when he had a chance last spring because cable carriage has largely brought UHF audience reach on par with VHF. A half-hearted review now, they say, would only squash "a substantive court decision" on the discount's legality. Powell had no comment.

The White House budget isn't clear on the issue, but Bush telecom policy chief Michael Gallagher confirms that a little noticed provision would hit broadcasters with a new tax. Sorry, we mean fee.

The White House is proposing a user fee on unauctioned spectrum that would begin in 2005 and generate $3.1 billion over the first 10 years. Details must be worked out with Congress—and stand a good chance of being defeated.

If approved, Gallagher says, they would apply to stations' digital spectrum. That's on top of a $500 million annual fee Bush wants for analog spectrum. Gallagher stressed the levies would be "fees, not taxes" and would compensate the public for spectrum that companies get gratis.