Captain Midnight's Sneak Attack

By Richard Zoglin

In the old days, people with complaints against the media had few recourses: a stern letter to the editor, perhaps, or a protesting phone call. "Captain Midnight," an outraged consumer of the space age, took more daring action. In a sneak attack made just after midnight on Sunday of last week, the self- appointed video avenger broke into an HBO presentation of the movie The Falcon and the Snowman with a cryptic message: GOODEVENING HBO FROM CAPTAIN MIDNIGHT. $12.95 A MONTH? NO WAY! (SHOWTIME/ THE MOVIE CHANNEL BEWARE).

The mysterious dispatch, seen for several minutes in the East and Midwest , by hundreds of thousands of subscribers to the pay-cable service, was clearly intended as a rallying cry for the more than 1.5 million owners of home satellite dishes in the U.S. These video free-lancers are angry because many of the TV signals they have been plucking from the sky are one by one turning into a jumble. In January, HBO and Cinemax (both owned by Time Inc.) became the first two cable services to scramble their signals, thus preventing dish owners from watching them without paying a monthly subscription fee. Showtime and the Movie Channel will begin similar scrambling on May 27, and most other satellite-beamed cable channels, including ESPN, MTV, the Disney Channel, Cable News Network and Superstation WTBS, will follow suit before the end of the year. Their actions have set off a heated battle over just who has the right to TV signals bouncing through the skies.

In one blow, Captain Midnight has become a folk hero in that struggle, though his identity remains a mystery. Ordinary home dishes are able only to receive signals, not to send them; thus experts think the pirate signal probably came from a TV station or other commercial facility. Wherever the stunt originated, TV executives were not amused. HBO has lodged a complaint with the FCC, threatened to prosecute the pirate and made technical adjustments that it claims will prevent any repeat attack. "He probably thinks this was just a prank," says HBO Vice President David Pritchard. "But the fact is someone has interfered with authorized satellite transmissions." The incident has raised concerns that other satellite-borne communications, including sensitive data transmitted by business and the military, could be similarly disrupted. Representatives of the three broadcast networks insist that a hacker would have difficulty breaking into their programming. But any satellite signal could theoretically be disrupted, experts say. "Most satellites are built with some safety measures," explains Karl Savatiel, director of satellite communications for AT&T. "But all satellites, including military satellites, are vulnerable if a person knows where the satellite is located, the frequency it uses for transmission and the sender's code."

Most dish owners, however, are less interested in disrupting other people's TV signals than in ending the disruption of their own. When home receiving dishes first became available in 1979, they were a boon for rural residents who lived outside the range of cable hookups. With a dish-shaped antenna aimed at one of several communications satellites circling the globe, these viewers could watch not just satellite-beamed entertainment channels (which cable systems pick up with their own dishes and distribute to subscribers via cables), but foreign broadcasts, corporate video conferences, even the private transmissions of network programs like the Tonight show, unedited and without commercials.

As the size and cost of home dishes dropped (from more than $10,000 just a few years ago to about $2,500 for many current models), the devices began to appear in urban and suburban areas, where more and more viewers are opting for dishes instead of cable. To retain control of their channels, the programmers turned to scrambling, in which the picture is electronically inverted and blurred. To unscramble it, a dish owner must buy a $395 decoder and, in the case of "premium" cable services, pay an extra monthly fee similar to that paid by cable subscribers ($12.95 for HBO, $10.95 for Showtime).

Fears that available programming will soon disappear have sent the home satellite business into a nose dive. Sales of dishes, tooling along at about 70,000 a month last autumn, fell to fewer than 15,000 in January. Bert LeCroy, owner of Sky Search Video in the Atlanta suburbs, estimates that ten dish dealers in the area have closed their doors in just the past two weeks. Many consumers are upset that the costly dishes they bought in pursuit of video independence may turn out to be duds. Says Vincent Morgan, 41, who has a dish in the backyard of his south Los Angeles home: "When the skies go black, a lot of people are going to end up with a very expensive birdbath."

Such fears are exaggerated; not all satellite-beamed signals are being scrambled, and the $395 decoder will bring in most of the ones that are. Pay- cable executives defend their right to charge dish owners for picking up their channels. Subscription fees are what defray the cost of programming, they argue, and it is only fair that dish owners ante up too. "In order for this product to exist, it has to be paid for by those who use it," says Duncan Murray, a vice president of the Disney Channel.

Some dish owners--a feisty, free-market breed--argue that any signals floating through the skies should be fair game. Others accept the programmers' right to scramble but claim that dish owners should be charged less--a "wholesale" price of perhaps $6 to $8 a month. "We don't mind paying a fee to view programs off a satellite," says Chuck Hewitt, vice president of the Society for Private and Commercial Earth Stations (SPACE). "But we think dish owners are being forced to pay an unreasonable price for programming." In most areas, the newly scrambled channels are being marketed to dish owners by local cable companies that are charging unfairly high fees, dish-industry officials contend, since the companies do not have to dig trenches or lay cable to dish owners' homes. The Department of Justice has launched an investigation of possible antitrust violations, and several bills have been introduced in Congress that would either regulate rates or place a moratorium on scrambling.

Though such legislation is given little chance of passage, the issue has taken on symbolic importance. "Lots of the owners of video dishes are farmers and other rural people," says Scott Chase, editor of a satellite-industry newsletter. "They already feel abused by bankers and the government. Now some big shot in the city starts scrambling their television programs." Cable executives insist that their main target is not private users but commercial enterprises (such as hotels, bars and theaters) that illegally sell satellite programming to customers. "Home dish owners may have diluted the value of our product, but the resellers upset us more," says HBO's Pritchard.

Still, home users are bearing the consequences, as Captain Midnight's guerrilla attack was meant to publicize. Most dish owners seem resigned to the inevitable loss of their free ride. "There will be a lot of screaming and hollering," says Beverly Jean Ely, a dish dealer in Hawthorne, Calif. "But I think everyone will eventually break down and buy a descrambler."

With reporting by Jim Byers/Los Angeles and Jerome Cramer/ Washington