DTV: Put up or pay up

FCC could fine station groups for unjustified digital delays

The FCC this week will notify several TV station groups that they must better explain why they are seeking to delay their May 1 deadline for inaugurating digital transmissions at many of their stations or face possible penalties.

Regulators are concerned that a handful of operators seeking to postpone their DTV rollout can't justify delays based on the FCC's criteria.

In all, nearly two-thirds of TV stations have said they will not meet the May 1 deadline. The bulk of the 862 extension requests that have rolled in since a Feb. 18 filing window opened indicate only a couple of extra months will be needed to bring stations on line. Unconcerned by the standard requests, FCC staff had approved 283 through March 20 and dismissed 49 that don't yet have construction permits and aren't bound by the May 1 deadline.

But catching a jaundiced eye from the FCC are several mid-sized station groups that have indicated they may not be able to offer digital at all of their stations within the next 13 months, when FCC extensions would expire.

FCC officials would not comment on the extension requests, but sources familiar with the agency's review said letters of inquiry would be sent to several licensees this week.

Although the letters will be little more than requests for additional explanation, the ultimate consequence for stations that delay DTV without FCC permission could include fines and, in extreme cases, revocation of licenses.

Stations are permitted up to two six-month delays if they demonstrate problems with equipment delivery, legal fights over zoning or tower siting, inability to obtain financing or other factors such as natural disasters.

A source familiar with FCC's action did not know which groups would be subject to additional inquiry. Groups such as Granite Broadcasting and Benedek, however, have raised some eyebrows by arguing that the financial troubles of their medium- and small-market stations have made financing DTV nearly impossible.

"Granite's existing senior credit facility is fully drawn down and ... does not have the ability presently to borrow additional money to fund its DTV buildouts," the company told the FCC.

Fox Television President Tony Vinciquerra, whose station group isn't predicting anything other than short delays, said neither the volume of extension requests nor the problems of mid-sized groups is surprising. "Since Sept. 11, we've experienced a dramatic downturn in advertising revenue, and there's still no real audience equipped for DTV," he said.

David Donovan, president of digital-TV trade group MSTV, said delays in mid-sized and small markets should not bother the FCC because large markets will be the drivers of DTV programming and new-set sales.

But the FCC may have little leeway to go easy in smaller markets—the rollout deadline is set in statute. Said Susan Eid, aide to FCC Chairman Michael Powell, "We have a mandate from Congress."

In Congress, broadcasters' dilemmas are getting a mixed reaction. Sen. John McCain, (R-Ariz.) complained they have "dawdled" and urged Congress to make broadcasters pay fees for "squatting" beyond the 2006 give back target for analog spectrum.

Rep. Billy Tauzin (R), the Louisianan leading the House Energy and Commerce Committee was more charitable, saying he has no worries if most broadcasters bring DTV online a couple of months late.