Senate Bill Would Fix Short Markets
Both Senate, House Version Are Expected To Solve Dispute Over Phantom Signals
John Eggerton 9/15/2009 5:13:07 PM EDT

A Senate version of a satellite reauthorization bill (formerly SHVERA now the Satellite Television Modernization Act) was introduced Tuesday and, like a House Judiciary draft on the same subject, it would allow satellite companies to deliver distant signals to so-called short markets.

Those are the ones that do not have a full complement of network affiliates.

But unlike a House draft, the Senate bill does not tie the importation of the distant signals. In the Senate version, they are adjacent-marekt signals, to those satellite carriers reaching all 210 markets, as the House bill does.

Like the House Judiciary draft that is getting a once-over at a hearing Wednesday, the Ssenate version, introduced by Senate Judiciary chairman Patrick Leahy (D-Vt.) allows for the deliver of in-state, out-of-market noncommercial TV stations signals if the stations are part of a noncom network.

Both the Senate and House versions of the bill are expected to solve the dispute over phantom signals, in which cable operators have to calculate royalty payments on systems serving contiguous communities as though all of them were receiving the same distant signals.

He praised the content and cable companies for coming up with a solution, which one source described as cable "cutting a check" of a onetime payment--reported $85 million--then having to pay for the ghost signals no longer.

The National Cable & Telecommunications Association has said that phantom payment sometimes can result in a several-hundred-percent increase in payments for adjacent cable systems that come under common ownership.

The original draft of the House Judiciary version of the bill would also have allowed TV stations to opt out of the compulsory license process if it obtained a single-source license covering rights to all its shows.

That provision was missing in the latest House Judiciary version, and was not in the Leahy bill.

But in a statement announcing the bill, Leahy said he hoped Congress would take that further step this year toward a marketplace model "to allow broadcast stations to opt-out of the statutory licenses....All non-broadcast channels carried by cable and satellite providers, such as ESPN and the USA Network, are able to aggregate a complex series of content rights, and negotiate for carriage in the free market," he said. "Local broadcasters should be permitted to do the same if they, too, are able to aggregate the necessary rights to license directly to cable and satellite providers.

Leahy said he expected the Judiciary committee to look at the issue again as the bill is marked up. There are at least four committees in play on the satellite reathoroization bill, the House and Senate Commerce and Judiciary committees, so the bill(s) will have plenty of opportunity for changes, if not time. The bill must pass by year's end or the license expires.

The Copyright Office recommended phasing out the compulsory license entirely in favor of marketplace negotiations. It also suggested better harmonizing cable and satellite compulsory licenses.