Copyright 2004 Reed Elsevier Inc.

Daily Variety

August 16, 2004, Monday

From Lexis Nexis

DirecTV has won federal approval to use spectrum that will allow it to beam local channels into 24 additional television markets, satisfying a requirement imposed on the company as a condition of its acquisition by News Corp.

The Federal Communications Commission approved DirecTV's request to move a satellite into an orbital slot controlled by Telesat Canada, allowing local channel broadcasts into markets like Toledo, Ohio, Burlington, Vt., and Charleston, N.C.

The move will increase DirecTV's local channel coverage to 130 of the 210 television markets in the U.S. EchoStar's DISH Network brought local channels into Norfolk, Va., on Thursday, bringing its total to 144 markets.

Satellite is more competitive with cable in areas where it can broadcast local stations. The Federal Trade Commission mandated that DirecTV provide local channels to 130 U.S. markets by the end of 2004 as a condition to allow News Corp. to take a controlling stake in the company.

Spectrum limitations are an ongoing challenge to the satellite industry, which is about to confront a severe spectrum shortage over the next few years as it tries to broadcast local high-definition stations.

Cable has a huge bandwidth advantage over satellite, an advantage that may become more pronounced as cable converts to high-definition, which consumes five times the bandwidth of a digital channel.

One solution being discussed between DirecTV and EchoStar is a spectrum-sharing arrangement that would allow both services to be broadcast from the same satellites. EchoStar topper Charlie Ergen floated the idea in a conference call earlier last week.

A DirecTV spokesman said talks remain informal. The arrangement would require them to overcome technical hurdles — both satcasters use different encryption codes and security systems. "It's not going to happen overnight," he said.