Washington Post 2006 Annual Report Download - page 37

In 2004 Clarity Media Group, a company associated with Denver businessman and billionaire Philip Anschutz, bought The
Montgomery, Prince George's
and Northern Virginia Journals, three community newspapers with a combination of paid
and free circulation that had been published in suburban Washington, D.C. for many years by a local company. In
February 2005 Clarity Media Group relaunched The Journal newspapers as The Washington Examiner, a free newspaper
which is being published six days a week in northern Virginia, suburban Maryland and Washington, D.C. zoned editions,
each of which contains national and international as well as local news. The Company believes the three editions of The
Washington Examiner
are currently being distributed primarily by zip-code targeted home delivery in their respective
service areas. The Washington Examiner competes in varying degrees with The Gazette Newspapers, Express and The
Washington Post.
In March 2006 Clarity Media Group began publishing The Baltimore Examiner, a similar type of free-
distribution newspaper for the greater Baltimore, Maryland metropolitan area .
The advertising periodicals published by Greater Washington Publishing compete with many other forms of advertising
available in their distribution area as well as with various other free-circulation advertising periodicals.
El Tiempo Latino competes with other Spanish-language advertising media available in the Washington, D.C. area,
including several other Spanish-language newspapers.
The Company's television stations compete for audiences and advertising revenues with television and radio stations and
cable television systems serving the same or nearby areas, with direct broadcast satellite (""DBS'') services, and to a
lesser degree with other media such as newspapers and magazines. Cable television systems operate in substantially all of
the areas served by the Company's television stations where they compete for television viewers by importing out-of-
market television signals, by distributing pay-cable, advertiser-supported and other programming that is originated for
cable systems and by offering movies and other programming on a pay-per-view basis. In addition, DBS services provide
nationwide distribution of television programming (including in some cases pay-per-view programming and programming
packages unique to DBS) using digital transmission technologies. In 1999 Congress passed the Satellite Home Viewer
Improvement Act, which gives DBS operators the ability to distribute the signals of local television stations to subscribers in
the stations' local market area (""local-into-local'' service), subject to obtaining the consent of each local television station
included in such a service. Under an FCC rule implementing provisions of this Act, DBS operators are required to carry the
analog signals of all full-power television stations that request such carriage in the markets in which the DBS operators have
chosen to offer local-into-local service. The FCC has also adopted rules that require certain program-blackout rules
applicable to cable television to be applied to DBS operators. In addition, the Satellite Home Viewer Improvement Act and
subsequent legislation continued restrictions on the transmission of distant network stations by DBS operators. Thus DBS
operators generally are prohibited from delivering the signals of distant network stations to subscribers who can receive the
analog signal of the network's local affiliate. Several lawsuits were filed beginning in 1996 in which plaintiffs (including all
four major broadcast networks and network-affiliated stations including one of the Company's Florida stations) alleged
that certain DBS operators had not been complying with the prohibition on delivering network signals to households that can
receive the analog signal of the local network affiliate over the air. The plaintiffs entered into a settlement with DBS
operator DirecTV, under which it agreed to discontinue distant-network service to certain subscribers and alter the method
by which it determines eligibility for this service. In 2003 the plaintiff's obtained a favorable verdict and an injunction
against DBS operator EchoStar, and those actions were upheld by the U.S. Court of Appeals for the Eleventh Circuit in May
2006. In October 2006 the lower court issued an order enjoining EchoStar from providing the signals of out-of-market
affiliates of the major broadcast networks to its subscribers (including, as permitted by the relevant statute, subscribers
who EchoStar could have provided signals to had it not violated the importation restrictions) after December 1, 2006.
EchoStar did stop providing those signals but leased satellite capacity to a third party who announced that it would provide
distant network signals to those EchoStar customers who would have been entitled to receive them from EchoStar absent the
court order. That arrangement is currently being challenged in court by the networks. In addition to the matters discussed
above, the Company's television stations may also become subject to increased competition from low-power television
stations, wireless cable services and satellite master antenna systems (which can carry pay-cable and similar program
material). Beginning in late 2005, the ABC and NBC television networks and the MTV cable network began to make
certain of their television programming available on a fee-per-episode basis for downloading over the Internet to video-
enabled iPod players. In 2006 Google launched a service that distributes certain programming from the CBS television
network, the National Basketball Association and other sources for viewing on personal computers as well as portable
video players. Google charges a fee for some of the programming available on its service while other programming is
provided free. Major TV networks have started to offer some of their programming on their Internet sites, in some cases
free of charge. In September 2006 Apple Computer, Inc. announced a new device (initially referred to as ""iTV'') that
will display programming downloaded over the Internet on television sets, and other vendors have begun to offer similar
devices. If these video-download services become popular, they could become a competitive factor for both the
Company's television stations and, with respect to the conventional delivery of television programming, the Company's
2006 FORM 10-K 21