'STELA': Hollywood's Next Big Legislative Fight?

An analyst suggests that the renewal of an obscure satellite-TV law could command the attention of the major broadcasters, big pay-TV distributors and giant tech companies.
Getty Images

Although political gridlock provides cause for disbelief that big legislation concerning the media industry is imminent, there might be reason to think that next Wednesday will be the beginning of a furious lobbying campaign in the nation's capital.

The past year has featured various legal controversies over the future of television.

STORY: CBS Seeks to Unwind Retrans Agreement With Dish Network

In particular, broadcasters have battled Dish Network over an ad-skipping DVR they believe is "a bootleg, commercial-free video-on-demand service" that's in alleged violation of their retrans agreements. In addition, broadcasters have gone to war against Aereo over TV signals picked up by antennae and then relayed to subscribers online. And then there have been other disputes over broadcast TV signals distantly retransmitted by pay-TV distributors.

The skirmishes have taken place in courtrooms and around negotiating tables, but Washington D.C. lawmakers might soon be getting involved, thanks to the expiration of an obscure law: the Satellite Television Extension and Localism Act.

STELA provides statutory licenses that allow satellite-TV companies to distantly retransmit broadcast signals to local subscribers who otherwise would be in the dark. Without the law, it's estimated that 1-to-1.5 million who don't live in broadcast areas would lose access to CBS, NBC, ABC and Fox. It's a law that needs to be renewed after five years, and the expiration date comes up in 2014.

On February 13, the House Communications Subcommittee is scheduled to hold a meeting on renewing STELA.

But according to Paul Gallant, an analyst at Guggenheim Securities who previously worked as a legal advisor to the FCC chairman, the pending legislation might be the impetus to go larger.

Gallant notes in a research report that at hearings last summer, "multiple members of Congress expressed unhappiness with signal blackouts during retrans disputes. That suggests Congress might use this satellite bill to ban signal blackouts and require arbitration to resolve pricing disputes."

That would be unsettling, he adds, for broadcasters like CBS, Sinclair, Gray, Hearst, LIN, Belo, Media General and Tribune. At the same time, companies he believes would stand to benefit are Time Warner Cable, Charter, Cablevision, DirecTV and Dish.

Broadcasters certainly wouldn't want to undercut the deal-making leverage that comes with the prospect of blackouts, but in theory, there could be the possibility of bargaining for something else.

STORY: Dish Network Makes $5.2 Bil Bid to Buy Clearwire Corp.

Last year, a federal judge denied the broadcasters' attempts to get an injunction that shut down Aereo. The 2nd Circuit Court of Appeals will imminently be issuing a ruling in the broadcasters' appeal.

"If broadcasters run into unfavorable court rulings in the next year, they may press Congress to require distributors like Aereo to pay for signals like cable/satellite do," writes Gallant.

If so, that might attract the attention of the tech giants.

Gallant adds, "If Congress does open up the Aereo issue, perhaps Google, Apple, Amazon, etc. will consider getting involved to explore whether there’s a new OTT opportunity for online video."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner