QUESTIONING TECHNOLOGY: Does "Death Star" Threaten TV?

It could one day become the "big bang" that forever changes the distribution of television. The merger of Rupert Murdoch's ASkyB with Charlie Ergen's EchoStar would create a 500-channel super direct-to-home satellite system that could reach virtually every living room in America. But the big question is whether it could also be the "death star" that kills traditional over-the-air television broadcasting.The reason for combining the two satellite systems is to create enough channel capacity to beam local network affiliate stations to about 75 percent of the U.S. market. That would finally allow a satellite broadcaster to overcome the current inability to deliver local stations, the last obstacle to becoming a full competitor to cable.However, even with 500 channels, there won't nearly be nearly enough room for the 1600 or so local broadcasters on the new service, now called "Sky." Presumably, only the big, successful network affiliates in each market will be "cherry-picked" to join the satellite lineup. Smaller stations undoubtedly will be left by the wayside to make the best of what remains of the declining over-the-air market.Despite assurances by Sky executives that no broadcaster will be hurt in this distribution mega shift, some in the television industry see a clear threat to local broadcasting. Among those are the people who advertise on commercial television."If viewers gravitate toward to the bird and the bird doesn't represent all of the local stations, that means fewer choices," said Mike Samet, director of media and new technologies at the Young & Rubicam advertising agency. "Advertisers want choice. They want to make sure the local stations are represented. Something that carries just part of the local panorama is not desirable from our point of view."Advertisers don't particularly care if television migrates from over-the-air transmission to direct broadcast satellite, as long as everybody comes along, Samet said. "We don't care how people pick up the TV signal. We care that it's available," he said. "We just don't want to see less competition due to a change in distribution methods."Though it is not yet a hot button issue among advertisers, there's growing concern about the ramifications of expanded satellite broadcasting, said Allen Banks, director of media in North America for Saatchi and Saatchi Advertising. "This is going to be a major, major fight," he predicted.Though Banks said "this merger presages a significant change" in broadcast distribution, he doesn't think it will play out to its worst case scenario. "I don't think the broadcasting community will allow it to happen," Banks said. "The major owners have stations in the small as well as large markets. They have an interest in growing those smaller markets. They have a lot invested in the business."Of course, before ASkyB and Echostar can merge into the Sky service, they must clear a range of political, regulatory and legal hurdles. With that in mind, a public relations campaign by Murdoch's News Corporation and Echostar has already begun to convince members of Congress and other opinion-makers that the new Sky venture would expand viewer choice rather than contract it.However, the cable industry, the biggest competitor to satellite broadcasting, is not buying that view. "I think what they are doing threatens the entire affiliate system of local broadcasting," said Steve Effros, president of the Cable Telecommunications Association, a cable industry trade group. "Were they to be wildly successful -- which I don't think they will be -- I think it would be a harbinger of the day when the networks ask 'why do we need local affiliates anymore?'"If (Sky) becomes a dominate distributor of programming in the United States," he continued, "the stations (not on satellite) are dead because they don't get carried in their own home market. If (Sky) starts putting a few chosen regional signals up on satellite, those signals are going to start being watched by a lot of people outside the region. That will occur at the expense of local broadcasters."Even if the U.S. Supreme Court overturns the pending "must carry" rule that now requires cable companies to transmit the signals of all local broadcast stations, cable systems will continue to carry 95 percent of local broadcasters anyway, Effros predicted. "Any station with significant viewership in the market will not be dropped by their cable system," he predicted.The uncertainty surrounding the Sky venture has generated many skeptics, including broadcasters themselves. "There's a good deal of skepticism as to if what they're claiming will actually come about," said Bruce Barnes, general manager of KXJB-TV, Fargo, North Dakota. "I'm sure the networks will have plenty to say about it."Besides, said Barnes, the networks have always protected their affiliates and he expects that to continue. "We really haven't been too concerned about it to this point because we have so many other fires to put out -- what with DTV (digital television broadcasting) and free ad time for politicians -- we just don't have time for something we're not sure will play out the way some are warning it will."That feeling is shared by Saatchi's Banks: "This is going to play out over a number of years. It won't happen over night. Predicting the outcome is like predicting tomorrow's weather."

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