But EchoStar, which has spent much of the year trying to skip that particular check, won't have to pay up as quickly as some on Wall Street had expected.
In addition, the satellite operator and rival
may have gotten a favor from Congress in the area of high-definition television, though it will be a few years before the company finds out how valuable it is.
At issue is a satellite bill passed Saturday as part of a lame-duck congressional spending legislation.
The bill -- called the Satellite Home Viewers Extension and Reauthorization Act of 2004 -- nominally focused on the extension of a 1999 law giving satellite operators the right to deliver broadcast TV channels from distant markets to satellite subscribers who can't receive local channels with a broadcast antenna.
reported earlier this year, another proposed provision in the bill had the effect of
forcing EchoStar to change the way it offered local broadcast stations as part of its programming lineup in certain markets -- and making that change within 12 months of the satellite law's passage.
EchoStar, which has estimated that the service change would cost it $100 million to implement, characterized the measure as an outgrowth of the broadcast industry's power in the halls of Congress, and a battle EchoStar didn't have much chance of winning. "I don't think we have ever prevailed on an issue with broadcasters in Washington, as a company," EchoStar CEO Charlie Ergen told analysts earlier this year.
The bill that was passed this weekend indeed keeps the local-channel-change burden on EchoStar (while DirecTV, which offers local programming via different lineups, is unaffected). But EchoStar will have 18 months to implement the change -- a deadline it still characterized Saturday as "tight."
Oppenheimer analyst Tom Eagan, who rates EchoStar neutral, characterized the mandate as a slight negative. Meanwhile, Sanford C. Bernstein analyst Craig Moffett, who rates EchoStar market perform, called the 18-month time frame "a decided improvement" from the 12-month schedule envisioned in a House of Representatives version of the bill.
Moffett also estimates the upgrade will cost EchoStar roughly $50 million.
EchoStar had a better opinion of another element of this weekend's bill, one which will give EchoStar and DirecTV the opportunity to deliver HDTV programming to subscribers if their local broadcasters don't offer these signals locally.
Satellite and cable system operators look increasingly to HDTV as a service for attracting new high-end customers and keeping their loyalty.
"The forward-thinking ... provision will motivate local broadcasters to build their towers and broadcast at full power in order to serve their communities," EchoStar said in a statement.
However, according to reports, that "digital white area" provision, as it's known, won't take effect until 2007. That delay, notes Moffett, "will give competitors DirecTV and cable a sizable lead in offering local HD." DirecTV in September announced plans to offer extensive local HDTV, partly via two new satellites it will be launching next year.
Moffett also notes that the bill directs the FCC to study the impact of what's known as "retransmission consent" on video competition. Investigating retransmission consent -- a right held by broadcasters that some, like
have used as leverage in negotiations with EchoStar -- "could open any number of cans of worms," Moffett writes. "This area will deserve close attention over the coming year."
EchoStar's stock rose 75 cents to trade at $33.40 Monday, while DirecTV was up 4 cents to $16.06.