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Posted on 10/06/2002 8:01:21 PM PDT by HAL9000
Federal regulators are poised to block EchoStar Communications Corp.'s $18 billion acquisition of rival Hughes Electronics Corp. in a vote that could take place as early as Monday, people familiar with the matter told The Wall Street Journal.Barring a major, last-minute concession from the two satellite-television providers -- a prospect that many industry officials over the weekend said still was possible -- at least three of the four members of the Federal Communications Commission are set to cast votes rejecting the deal, according to people knowledgeable about the matter. FCC Chairman Michael Powell is among those opposing the deal, these people said.
The FCC staff recommended two weeks ago that the commissioners block the proposed transaction, arguing that allowing the creation of a virtual monopoly in direct-to-home satellite broadcasting would reduce consumer choice and wouldn't be in the public interest.
Mr. Powell, in a television interview Friday, said the agency's decision on the deal was "imminent," though he declined to confirm the commission's intention to block it. He added that the decision "could be days away."
So far, neither Hughes, El Segundo, Calif., nor EchoStar, Littleton, Colo., has backed away from the deal. That is partly because under the terms of their complex agreement, both sides face huge financial penalties if they fail to use their "best efforts" to win federal approval. A Hughes spokesman, for instance, said the company's "entire focus" is on completing the transaction.
Yet investors and Wall Street analysts already are predicting a rash of finger-pointing, and even the potential for drawn-out litigation between the companies if the deal falls apart. The collapse of the merger would be a blow to Hughes parent General Motors Corp., which has been hoping to raise more than $4 billion from the deal in order to help fund its growing pension obligations and strengthen its balance sheet. EchoStar, meanwhile, faces the prospect of having to pay a $600 million "breakup fee" if the deal is blocked by U.S. officials.
From the beginning of their yearlong, uphill fight to gain regulatory approval, both companies considered the commission more sympathetic to their basic argument that the merged entity would benefit consumers by providing stronger competition to cable-television operators. Until the last few days, the companies and their legal teams expected the Justice Department to take the lead in publicly disclosing the Bush administration's decision. Mr. Powell's comments upset that strategy, while putting the decision on a faster track than previously anticipated.
The growing opposition to the deal comes as regulators appear to have rejected the companies' fundamental argument that they aren't competitors in any meaningful sense because their main long-term rivals are cable-television providers. To mitigate any antitrust concerns, the companies have argued that combining satellite fleets, eliminating other duplication and spreading costs over many more subscribers will allow them to give consumers more channels, enhanced services and lower monthly fees for Internet connections.
Ergen is a vicious, egotistical prick who wants to monopolize this segment of the industry. Funny how he abhors monopolies when they might cost him some money. It won't be funny for the people who'll get stuck with his bills when they have to pay what he wants, or else end up without service.
I suspect that there's a political component to this: Bush doesn't want to have his rural constituents bitter about high priced satellite TV. So, Charlie doesn't get his buyout deal...
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