LAS VEGAS -- FCC Comr. Powell endorsed free market vs. govt. regulation, pleasing consumer electronics officials at the CES here Sat. But reaction was more muted when he also indicated reluctance for govt. to move aggressively to spur DTV transition. Powell, who is widely rumored to become next chmn. of FCC, was interviewed one-on-one by CEA Pres. Gary Shapiro, also rumored to be candidate for position in new Bush Administration, despite recently signing new 10-year contract with CEA.

Writers Guild of America (WGA) has called for negotiations on new contracts with movie and TV program producers to begin Jan. 22, with 2-week deadline to reach agreement before current contract expires May 1. If those sessions fail to produce agreement, WGA said it wouldn’t return to bargaining table until early April -- with both sides now predicting strike is likely. Studios and networks also are facing negotiations later this year with Screen Actors Guild and American Federation of TV & Radio Artists, raising likelihood that 3 guilds could strike at same time. Programmers have charged that WGA proposals (if picked up by other unions) would cost them more than $2.2 billion additional over next 3 years -- more than they now are expected to make in profits. WGA disputed that figure, saying guild’s proposal would cost studios $725 million over next 3 years. Dreamworks head Jeffrey Katzenberg told reporters that WGA demands would have ripple effect that could bankrupt producers. Mostly at issue are future revenues from new media, including Internet, DVD, videocassettes. Disney’s Robert Iger said programmers were curious as to why WGA had put 2-week limit on early negotiations: “It’s our intention to begin when we begin and to continue for as long as we possibly can” to reach agreement. In meeting with reporters, 3 program executives said it wasn’t their intention to conduct negotiations in media but to send clear signal to WGA that its members should lower their demands. Programmers went out of their way to dispel idea that studios have rigid negotiating strategy or that they secretly welcome strike, saying 14 companies that are members of Alliance of Motion Picture & TV Producers are in agreement. Negotiations will start with sharp division between parties, with guild claiming its members haven’t received fair share of “the dramatic increases in revenues in both screen and television,” according to recent report to WGA membership. Last WGA strike against studios, in 1988, lasted 5 months. Adding to current unrest is fact that studio contracts with SAG and AFTRA expire this spring.

PASADENA -- Threatened strike against TV networks this spring by Writers Guild of America (WGA) and other unions (see separate item, this issue) was a major topic of conversation here as Pax TV, UPN and WB kicked off semiannual round of questions and answers with TV critics. “Everyone that’s involved on both sides says there’s going to be a strike,” WB CEO Jamie Kellner said. “I have no involvement whatsoever, so I say there’s not going to be a strike. I think there’s going to be a lot of reasons to avoid a strike.” He and UPN executives said they had contingency plans in place in case there was strike, including at least 4 “reality” programs under development by WB, plus advantage of being able to add movie night by using affiliate Turner Bcstg.’s huge library of films.

Twice-delayed Arianespace Flight 137 was set finally to get Eurasiasat 1 off ground after our deadline Mon. Flight cleared launch readiness review Jan. 6 and launch was expected in window of 5:08-7:51 p.m. ET. Flight had been planned for Dec. 8 but was rescheduled for Dec. 11 for checks on Ariane 4 launcher. Eurasiasat 1 contractor Alcatel Space requested 2nd round of verification on satellite that caused further delay to Jan. 8 (CD Dec 12 p8).

FCC Chmn. Kennard will announce his resignation as soon as Commission votes on AOL takeover of Time Warner, which is expected this week, Commission source told us. Kennard’s term expires in June but he was expected to leave once George Bush was sworn in as President Jan. 20. It will be up to Administration to decide whom to name as interim FCC chairman until permanent replacement for Kennard is appointed. FCC Comr. Powell is expected to be tapped but he hasn’t confirmed that. Source didn’t say when Kennard actually was leaving or reveal where he planned to work once he left. He moved to Commission from Verner, Liipfert, Bernhard, McPherson & Hand, where he was partner.

Pa. PUC gave Verizon “passing grade” after reviewing final report from KPMG Consulting on tests of carrier’s operation support systems (OSS), even though “some deficiencies” remain to be corrected. But PUC also made clear that its ultimate decision on whether to endorse any Verizon Sec. 271 interLATA long distance application to FCC would depend in large measure on how well company did in addressing OSS deficiencies and filling commercial CLEC service orders in next 3 months. KPMG told PUC Verizon had “passed sufficient operational aspects” to conclude test program. PUC’s Fri. action set stage for 100-day period during which agency will monitor Verizon’s commercial OSS performance and review its compliance with non-OSS-related market-opening requirements of Telecom Act’s 14-point checklist. Verizon said it was “pleased the PUC deemed the final KPMG report as a passing grade… We're confident that when all the evidence is examined, the PUC will support our long distance application to the FCC.” However, local rival AT&T said that unless PUC addressed gaps and “questionable metrics” in KPMG test results, Pa. could be vulnerable to same OSS glitches as hit Verizon in N.Y. after its long distance entry there. AT&T said Verizon was rushing to meet self-imposed “artificial deadline” for long distance entry and “hasn’t done all its homework when it comes to system readiness” for large volumes of CLEC service orders.

NCube Corp. filed patent infringement suit against SeaChange International Mon., charging that latter’s video-on-demand (VoD) products violated one of nCube’s interactive TV patents. NCube said it was seeking permanent injunction against SeaChange’s shipping its allegedly infringing products. In earlier court battle on other patents, Del. jury ruled in SeaChange’s favor in Sept., but nCube is challenging that decision.

To no one’s great surprise, cable TV remains dominant technology for delivering video programming to consumers, according to 7th annual video competition report adopted last week and released by FCC Mon. Commission found that cable industry totaled 67.7 million subscribers in June 2000, up one million (1.5%) from 66.7 million in June 1999. But DBS continued to make steady inroads in cable’s market share, adding almost 3 million subscribers over same period to reach nearly 13 million last June, up 29% from year earlier. Largely as result, cable operators now control 80% of burgeoning pay-TV market, down from 82% year earlier, while DBS providers now command growing 15.4%.

Officials of Simi Valley, Cal., are urging cable subscribers to protest increase in fees, announced by former owner Comcast day before Adelphia Communications took over ownership of Ventura County cable system Jan. 2. City officials accused Adelphia of orchestrating increase, which takes effect Feb. 1, that raised monthly cost of 51-channel basic package to $39.26 from $37.10. Adelphia, which didn’t mention planned increase before taking over, said it was justified because of system upgrade, including 10 new channels and establishment of local customer service center. In Dec., city had increased franchise fee to 5% of gross revenues from 3%.

XM Satellite Radio expected to launch first of 2 Boeing 702 model satellites after our deadline Jan. 8 with window for XM-1 satellite called Roll opening at 5:35 p.m. ET. from sea site 3,000 miles west of Long Beach, Cal.