The Department of Justice Thursday filed a lawsuit in U.S. District Court to bar
EchoStar Communications Corp.'s planned takeover of Hughes Electronics Corp.-owned DirecTV Inc.
EchoStar chairman Charlie Ergen's last-minute effort to assuage concerns
about reduced competition in the multichannel-TV market failed to convince
antitrust regulators to let the deal go forward.
Ergen has been urging DOJ antitrust officials to accept a revised plan that
would hand some satellite spectrum and facilities to Cablevision Systems Corp., which
is posturing to start its own direct-broadcast satellite service.
"This merger would give EchoStar control of the skies for the provision of
video programming by satellite, leaving customers to suffer from the resulting
reduction in competition," said Charles James, head of the antitrust division at
the DOJ.
The department was joined in the suit by attorneys general from 23 states,
the District of Columbia and Puerto Rico.
Ergen's plan to spin satellite capacity to Cablevision is "unlikely to become
a sufficient replacement for the vigorous competition that now exists between
Hughes and EchoStar within a reasonable period of time," the DOJ said.
The Federal Communications Commission has already rejected the DirecTV
takeover, which would have put all of the major U.S. DBS slots into
the hands of one company.
Ergen has ways to appeal the FCC decision, but the DOJ suit probably cratered
the deal and will leave Ergen fighting with DirecTV over a $600 million breakup
fee and a commitment to buy international satellite operator PanAmSat Corp. for $2.5
billion.
