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Archive for Friday, October 11, 2002

FCC rejects satellite TV merger

Agency says Echostar, Hughes Electronics deal would create monopoly

October 11, 2002

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— The Federal Communications Commission on Thursday blocked a proposed $18.8 billion merger of the two largest satellite TV companies. EchoStar Communications Corp. and Hughes Electronics Corp. said they would revise the deal to try to win approval.

The FCC voted 4-0, saying the deal would create a virtual monopoly that would be particularly hurtful for millions of Americans without access to cable television.

It was the first time the commission had blocked a major media merger since 1967. The commission gave EchoStar and Hughes 30 days to amend their proposal. The companies also are continuing negotiations with the Justice Department, which is scrutinizing whether the deal conforms with antitrust laws.

"Everyone is going to put forth best efforts to get this deal and all the companies want to see this merger approved. We're still moving in that direction," said Hughes spokesman Richard Dore.

Kenneth Ferree, chief of the FCC's media bureau, said the commission remains open to revisions, but the agency staff's analysis said the negative effects of the deal on consumers were "staggering."

EchoStar, based in Littleton, Colo., runs Dish Network, while El Segundo, Calif.-based Hughes operates DirecTV.

Together they serve about 18 million subscribers and would be the largest pay-television service, although they would be overtaken if a merger of cable TV giants AT&T and Comcast is approved.

EchoStar and Hughes argued the merger is needed to offer competition to cable TV. The commission was unconvinced by the argument.

"EchoStar and DirecTV not only compete but compete vigorously, not only with cable but with each other," said FCC chairman Michael Powell.

Moreover, Powell said the deal could create a monopoly, particularly in rural areas without access to cable, and reduce competition in other areas.

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