Washington Post 2003 Annual Report Download - page 36

The circulation of The Gazette Newspapers is limited to Montgomery, Prince George's and Frederick Counties and parts of
Carroll, Anne Arundel and Howard Counties, Maryland. The Gazette Newspapers compete with many other advertising
vehicles available in their service areas, including The Potomac and Bethesda/Chevy Chase Almanacs, The Western
Montgomery Bulletin, The Bowie Blade-News, The West County News
and The Laurel Leader, weekly controlled-
circulation community newspapers, The Montgomery Sentinel, a weekly paid-circulation community newspaper, The Prince
George's Sentinel,
a weekly controlled-circulation community newspaper (which also has a weekly paid-circulation
edition), The Montgomery and Prince George's Journals, daily paid-circulation community newspapers, and The Frederick
News-Post
and Carroll County Times, daily paid-circulation community newspapers. The Southern Maryland Newspapers
circulate in southern Prince George's County and in Charles, Calvert and St. Mary's Counties, Maryland, where they also
compete with many other advertising vehicles available in their service areas, including the Calvert County Independent
and St. Mary's Today, weekly paid-circulation community newspapers.
The advertising periodicals published by Greater Washington Publishing compete both with many other forms of advertising
available in their distribution area as well as with various other free-circulation advertising periodicals.
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 services, and to a lesser degree
with other video programming providers and with other media such as newspapers and magazines. Cable television
systems operate in substantial portions of the Company's broadcast markets where they compete for television viewers by
importing out-of-market television signals and by distributing pay-cable, advertiser-supported and other programming that is
originated for cable systems. In addition, direct broadcast satellite (""DBS'') services provide nationwide distribution of
television programming (including in some cases pay-per-view programming and programming packages unique to DBS)
using small receiving dishes and digital transmission technologies. In November 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); although since April 2000 DBS operators have
been required to obtain the consent of each local television station included in such a service. The analog signal of each of
the Company's television stations is currently being distributed locally by satellite. Under an FCC rule implementing
provisions of this Act, since January 2002 DBS operators that offer local-into-local service have been required to carry 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-exclusivity rules applicable to cable
television to be applied to DBS operators. The Satellite Home Viewer Improvement Act also continues restrictions on the
transmission of distant network stations by DBS operators. Under these restrictions, DBS operators are prohibited from
distributing in a local market the signals of any distant network-affiliated television station except in areas where the analog
over-the-air signal of the same network's local affiliate is not available or where the local affiliate grants a waiver. 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
this restriction. The plaintiffs have entered into a settlement with DBS operator DirecTV, under which it will discontinue
distant-network service to certain subscribers and alter the method by which it determines eligibility for this service. Litigation
against DBS operator EchoStar is continuing. The Satellite Home Viewer Improvement Act also provides that certain distant-
network subscribers whose service would have been discontinued as a result of this litigation will continue to have access to
distant-network service through 2004. 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, satellite master
antenna systems (which can carry pay-cable and similar program material) and prerecorded video programming. Further,
the deployment of digital and other improved television technologies may enhance the ability of some of these other video
providers to compete more effectively for viewers with the local television broadcasting stations owned by the Company.
Cable television systems operate in a highly competitive environment. In addition to competing with the direct reception of
television broadcast signals by the viewer's own antenna, such systems (like existing television stations) are subject to
competition from various other forms of television program delivery. In particular, DBS services (which are discussed in
more detail in the preceding paragraph) have been growing rapidly and are now a significant competitive factor. The
ability of DBS operators to provide local-into-local service (as described above) has increased competition between
cable and DBS operators in markets where local-into-local service is provided. DBS operators are not required to provide
local-into-local service, and some smaller markets may not receive this service for several years. However, in December
2000 legislation was enacted to provide $1.25 billion in federal loan guarantees to help satellite carriers (and cable
operators) provide local TV signals to rural areas, and DBS operators have stated that they intend to provide local-into-
local service in a greater number of markets in the future. Local-into-local service is not yet offered in most markets in which
the Company provides cable television service, but such services could be launched by DBS operators at any time. In
December 2003 News Corporation Limited (""News Corp''), a global media company that in the United States owns the
16 THE WASHINGTON POST COMPANY