tony2tall said:
Are the mega stations responsible for lobbying this legislation into place?
Actually it's likely the exact opposite. Basically it all comes down to money. During sweeps week, local stations track their number of viewers. The more viewers they get, the more they can charge advertisers during the period following sweeps. Local stations want as many people watching their station as possible.
If distant networks were available, a significant number of people would likely subscribe to them instead of their locals, or at least in conjunction. This creates competition for the local station for the exact same programming. It's very likely that the station would lose local viewers who might watch the same programming on the distant network. Fewer viewers means they end up charging less for advertising, equating to lower revenues.
There are exceptions to this though. If you can't receive a quality signal OTA, do to environmental obstructions (mountains, valleys, etc), or distance, then you may qualify for distant networks. This is because the local station isn't "losing" a viewer as you couldn't view it anyways.
From the way you worded your question, you were wondering why you have to get say NY or LA distant channels as oppose to just the next DMA over? I can't really say for sure why. It's possible that it makes it easier for billing purposes. Also not all DMAs are available everywhere. Some locals are on spot beams so they may not be available reliably even in the next county over if they are right on the edge of the spot.
This whole process was recently up for review in Congress. A few changes were made so that significantly viewed stations from outside your market may become available.