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Open season on the bird?

Opponents line up against Ergen's proposed merger of EchoStar and DirecTV 1/20/2002 07:00:00 PM Eastern

EchoStar CEO Charlie Ergen must feel like one of those peripatetic ducks in a shooting gallery as his proposed $26 billion purchase of Hughes Electronics wends its way through Washington.

Ping! The Rev. Al Sharpton and hundreds of protesters picket EchoStar's Washington office, complaining loudly—"Charlie Ergen go to hell" and "We're dis'n the Dish"—that EchoStar is refusing to carry black gospel channel The Word Network. "If you don't want to do business with us, then we will not do business with you," Sharpton told the crowd. A final prayer paints EchoStar as Goliath and asks that it, and Ergen, fall.

Ping! Some 30 states' attorneys general, led by Missouri's Jeremiah Nixon, consider opposing the deal. "If the two satellite companies in existence are looking at merging, that causes concerns about antitrust and anticompetitive behavior," says Nixon spokesman Scott Holste. Last November, Nixon sent Attorney General John Ashcroft a letter along the same lines.

Ping! Disney is all but ready to actively oppose an EchoStar-DirecTV combination over their carriage battle: EchoStar threw ESPN Classic off its system and wants to do the same to ABC Family, which Disney recently purchased from Fox. Disney could be a serious threat, considering that it led the successful fight to get conditions attached to the AOL-Time Warner merger.

Ping! Rupert Murdoch's News Corp. is quietly but diligently working on Capitol Hill to kill the deal.

Ping! Ping! Ping! Broadcasters launch a full-scale lobbying assault. And broadcasters don't just oppose the merger; many of them also oppose Ergen.

"Everybody hates Charlie. Charlie never sticks to a deal. Everyone knows that," says one broadcast lobbyist.

"Doing a deal with Charlie Ergen is like trying to put a nail in Jell-O," says Jim Keelor, president of Liberty Corp.

Broadcasters believe that Ergen has proved their point repeatedly.

First, he beamed distant TV signals into their markets without their permission, a situation that the courts still are untangling. He fought to get local TV signals, then balked when Congress ruled that he would have to get consent as well as pay for them. Broadcasters felt that cutting retransmission deals with DirecTV was relatively easy, but Ergen haggled with them over how much the fees would be, chafing at the notion that he should pay at all.

When the time came for Ergen to adhere to the new "carry one, carry all" regime, he appeared to be exploiting a technicality in the 1999 law, sending notices last summer to many TV stations that they had offered no legal proof that their signal was of good enough quality for EchoStar to carry. For the most part, the FCC smoothed out that problem by clarifying its rules, but broadcasters still have nine carriage complaints filed against EchoStar (and three against DirecTV) at the commission.

Then, just before the Jan. 1, 2002, carriage deadline, EchoStar announced that customers in as many as 30 markets would have to mount a second dish to get many of their local signals. While EchoStar says the second-dish solution is only until it can launch a spot-beam satellite, the NAB has complained bitterly to the FCC that EchoStar is relegating many TV stations to an "inaccessible technological ghetto."

But one executive admitted that, no matter how much the industry dislikes Ergen, he's the $9 billion man, according to Forbes
magazine, and he can't be ignored.

For his part, Ergen is concentrating on getting his deal done. "We believe that, once government officials and special-interest groups closely examine all the issues surrounding our impending merger," company spokesman Judiane Atencio said in response to the gathering opposition, "they will not only approve of it but will extol to others the many benefits that a combined company can offer all consumers, both rural and urban."

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