Martin Will OK DirecTV Merger

Answering critics, FCC chairman also previews agenda

Federal Communications Commission Chairman Kevin Martin said Friday that he will recommend approval of the Liberty Media-DirecTV merger, subject to some conditions.

Martin said he favored the deal as long as Liberty chief John Malone either restructured or divested his interest in Puerto Rican cable systems. He made the comments during a press conference where he outlined the commission's Feb. 26 agenda, an apparent response to critics of FCC processes and his management.

He also said the FCC would maintain most of the conditions applied to DirecTV when News Corp. purchased the satellite service. Martin said he wasn't sure whether he had the necessary three votes to approve the proposal.

The chairman said he expected the Department of Justice's review of the deal first but added, “We have coordinated it, but we have decided that we are going to go forward on this at this time.”

The DirecTV deal has taken a rather circuitous path since it was proposed a little over a year ago. The commission has an informal shot clock of 180 days on mergers, but frequently misses its own mark.

When the deal was announced Jan. 31, 2007, Liberty said it would agree to abide by the conditions—including program access and carriage conditions for the regional sports networks—that the FCC imposed on News Corp. when it approved the company's purchase of more than one-third of the satellite broadcaster from Hughes Electronics in January 2004.

They include an agreement to stay out of exclusive programming arrangements with any multichannel-video provider, not to discriminate against unaffiliated program services and to submit any regional sports network carriage impasses to independent arbitration.

Martin's public support of the merger came as part of an unusual meeting in which he outlined the FCC's agenda—a first in terms of the press and the public.

“This is particularly difficult figuring out how to end up handling press questions as they relate to transactions,” he said. “I have not traditionally had press briefings on every item that I proposed.”

Among items to be discussed Feb. 26 is a proposal to help low- and full-power broadcasters switch to digital TV.

• On the satellite front, Martin proposed clarifying that the carry-one/carry all regime for local TV stations applies to their DTV signal as well. That means if a satellite operator carries any local station DTV signal in a market, it must carry all of them. Martin did say that satellite operators would be allowed to phase in that carriage, and that the commission would grant waivers on a case-by-case basis if capacity constraints make that infeasible.

• Martin also proposed helping low-power TV stations make the transition to digital more swiftly, including opening up a filing window so they can apply for DTV licenses. Currently, 4,700 low-power stations and translators will still be allowed to broadcast in analog after the transition, but Martin says he is proposing a hard date for transition of 2012.

Why so far out? Because by law, the low-power broadcasters can't get access to $65 million in DTV transition funds until 2010.

• The chairman also wants to make it easier for Class A low-power stations, which already have similar public interest obligations as full-powers, to upgrade to full-power status, though not necessarily increase their power.

That would make the stations more valuable, allow them to raise more money to convert even without the government funds, and win cable must-carry status.

It also would help with an increasingly high-profile problem of DTV-to-analog converter boxes: Most currently do not pass through an analog signal and so would not receive low-power stations.

That proposal got an instant thumbs-down review from the National Cable & Telecommunications Association (NCTA). “How low-power stations are viewed over-the-air after the digital transition is easily addressed by communicating the availability of converter boxes that will 'pass through' the analog signal,” said NCTA VP Brian Dietz said in a statement. “It would be plainly irrelevant to burden cable operators with unconstitutional must-carry obligations that will not even help over-the-air viewers.

“It would be especially unfortunate now to inject needless uncertainty and litigation, which would only serve to undermine the goal of a smooth digital transition.”