EchoStar ruffles feathers

Ergen under fire from broadcasters over carriage and from the FCC over the Young fracas

Inside the Beltway, EchoStar Chairman Charlie Ergen is seeking approval of a deal that would give him control of the country's only satellite-TV company. Outside of it, however, he is riling broadcasters and has even run afoul of the FCC on a local-station issue.

Ergen is trying to buy General Motors' Hughes Electronics—and its crown jewel, EchoStar rival DirecTV (see story, page 12). If GM accepts the offer, Ergen will need the favor of regulators and lawmakers.

That may have just gotten harder. The FCC last Monday scolded EchoStar for not playing fair with Young Broadcasting. In addition, broadcasters complain that EchoStar has been denying their carriage requests even though a 1999 law requires satellite-TV companies to carry every local TV station in every market they serve.

The FCC has been mediating a fight between EchoStar and Young Broadcasting because the former wants to carry the latter's WKRN-TV in Nashville and KRON-TV in San Francisco, but the two companies cannot agree on terms. The stations have been off EchoStar systems since February.

While the two companies were battling it out, EchoStar asked the FCC to treat some documents it filed as confidential. Concurrently, EchoStar disclosed much of the same information on its program Charlie Chat, in which Ergen talks to EchoStar subscribers. Young complained that airing the information violated EchoStar's confidentiality request, and the FCC agreed.

"We admonish EchoStar for this abuse of process and caution EchoStar to take greater care with regard to future filings of this type," the FCC wrote.

Also last week, TV stations complained that EchoStar has rejected the must-carry request of practically every station that has asked.

According to FCC rules, stations needed to tell satellite-TV companies by July 1 whether they want to negotiate payment or request carriage. Stations affiliated with the Big Four broadcast networks already have made their deals with satellite-TV companies and are paid in return for access to their signal. But smaller stations—such as The WB, UPN and PaxNet affiliates—can't get satellite-TV companies to pay them, so they elect must-carry. About 270 stations asked for that option, said FCC Deputy Bureau Chief Bill Johnson.

EchoStar has denied coverage to most of those stations because, it said, they haven't offered proof that they have a signal of sufficient quality, which FCC rules allow satellite companies to request.

EchoStar said it intends to follow the law but wants stations to prove that they offer a good signal.

"Ascertaining the precise volume of qualified signals is critical so that we order the necessary equipment to ready our facilities and avoid incurring unnecessary costs," said EchoStar spokesman Marc Lumpkin. "We are working with the TV stations to give them the opportunity to conduct tests of their signals, and we will be meeting with them in the near future."

Broadcasters see EchoStar's move as a way to get out of having to carry the stations.

"The satellite carriers lost in Congress, they lost in the courts, and now they are thumbing their noses at the law," said NAB spokesman Dennis Wharton.

Wayne Godsey is president and general manager of ABC affiliate KMBC-TV, ch. 9, in Kansas City, Mo., and also oversees UPN affiliate KCWE(TV), ch. 29. He said he got a letter from EchoStar but doesn't understand why EchoStar needs legal proof of his signal.

"Ch. 9 and ch. 29 are right next to each other on the tower," he noted. "Both signals should be the same quality standard."

Meanwhile, DirecTV sent Godsey a letter saying it was "pleased to inform" him that the company will be carrying ch. 29 come January and that the signal meets the quality standard required by the FCC.

DirecTV has rejected some 90 stations' requests for carriage, said DirecTV spokesman Bob Marsocci. But the difference between the two companies, the FCC's Johnson said, is EchoStar's flat rejection of practically all requests compared with DirecTV's individualized letters that showed some knowledge of stations' signal strength.