Posted on 10/31/2002 8:21:11 PM PST by HAL9000
WASHINGTON, Oct 31, 2002 (AP WorldStream via COMTEX) -- The proposed merger of EchoStar Communications Corp. and Hughes Electronics Corp., creating the nation's largest subscriber television company, could untangle in a messy and expensive breakup following the government's suit to scuttle the deal.The companies issued statements on Thursday that they were considering their options to salvage the $22.6 billion deal.
The government said the deal would eliminate competition between the two largest satellite television companies and hurt consumers.
Only last week EchoStar offered to give rival Cablevision Systems Corp. a satellite frequency that would allow the company to compete nationwide, and also ease monopoly concerns.
Charles James, assistant attorney general of the department's antitrust division, said the department was not convinced Cablevision could be a legitimate competitor within the next two years.
The government said the merger would create a monopoly in millions of rural homes where cable television is not available and reduce choices in tens of millions more. Twenty-three states, the District of Columbia and Puerto Rico joined in the lawsuit filed Thursday.
The Federal Communications Commission has voted unanimously to oppose the merger, saying it would have "staggering" adverse effects for consumers.
EchoStar, based in Littleton, Colorado, runs Dish Network, while El Segundo, California-based Hughes operates DirecTV. Combined, they would become the largest pay-television service, with 18 million subscribers.
EchoStar and Hughes said the merger would allow them to compete with cable companies and let all subscribers receive their local stations through satellite, which the General Accounting Office, the auditing arm of Congress, said in a report issued Thursday is not possible with current technology.
Hughes said in a statement the companies would meet to discuss their options.
Gene Kimmelman, director of the Consumers Union, which publishes Consumer Reports magazine, said the combined satellite companies would have been a new, strong competitor that would have forced cable operators to keep rates down.
The satellite companies are contractually obligated to make every effort to save the deal until a Jan. 21 deadline when Hughes can walk away.
Failure to complete the deal could be costly for EchoStar, which would have to pay Hughes $600 million to break the deal and would still have to pay Hughes $2.7 billion to buy its interest in PanAmSat, which offers satellite feeds to businesses and telecommunications companies.
A long legal fight with the government could hurt Hughes, which would be prevented from finding another buyer. It is also possible EchoStar will pursue its legal options to get a better deal for PanAmSat, said Morgan Stanley analyst Vijay Jayant.
Jayant said if EchoStar is no longer in the mix, it could clear the way for Rupert Murdoch's News Corp. to make a bid to buy Hughes from its parent company, General Motors. Murdoch had spent 18 months negotiating with Hughes before EchoStar made its pitch last year.
States filing suit include Arkansas, California, Connecticut, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Massachusetts, Mississippi, Montana, Missouri, Nevada, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Vermont, Washington and Wisconsin.
As a DirecTV subscriber, I welcome the merger.
DTV has NFL Sunday Ticket, and Dish owners would be able to get that after a merger.
As far as a monopoly in rural areas that dont get cable... what did these people do before mini-dish technology?!
Like what? The BYU Extension channel? The Polka Channel? I've got DTV, but I've seen the Dish lineup, and I don't recall salivating over any particular channels that I didn't get on DTV.
As far as a monopoly in rural areas that dont get cable... what did these people do before mini-dish technology?!
Same thing a lot of 'em do now - B.U.D. ;)
Even worse, as HDTV is becoming more popular & hitting critical mass, there is no available bandwidth at the satellite companies for adding any additional high definition digital channels. A merger would free up spectrum & satellite capacity which is duplicated between the two companies for all the local stations, to be used for higher quality channels, including HDTV.
Cable can barely even spell HDTV right now, and they could care less because they are effectively a monopoly on most areas. For HDTV, you're stuck with whatever the satellite companies can squeeze into their meager bandwidth or putting an antenna back up on your roof (my option) to receive local HDTV digital broadcasts. The cable monopoly where I live absolutely SUCKS, and seriously needs the competition that a merged DTV/Dish would provide. Rural customers would not suffer because the satellite providers must still compete with cable & broadcast in the much more highly populated & money-making areas.
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