Whether or not Charlie Ergen's new satellite TV company will fly depends almost completely on the will of the Department of Justice.
Observers expect Justice will review EchoStar's proposed purchase of Hughes Electronics because it reviewed News Corp.'s failed purchase of Primestar in 1998.
When the Justice Department blocked that merger, it said the multichannel video market comprised of both satellite and cable should be viewed as one market. If that's true, all EchoStar should have to do is convince the Bush administration that it will treat fairly the 5-7% of rural customers in the U.S. who aren't passed by cable.
Consumers Union's Gene Kimmelman said he would not oppose the deal if two conditions were met: EchoStar has to agree to offer rural customers the same prices, terms and conditions to rural customers, and it has to stop opposing Northpoint Technology's bid to use redirected direct broadcast spectrum to offer multichannel video and broadband Internet services. Ergen's already said he'll agree to the first.
"I don't see the Justice Department suing a company that is willing to sign a consent decree in order to solve any problems," says Andrew Schwartzman, president of Media Access Project.
On Tuesday, Ergen and DirecTV Chairman Eddy Hartenstein will begin a round of Washington visits. The two plan to pay a visit to House Energy and Commerce Chairman Billy Tauzin (R-La.), among others.
Ergen might have more trouble in the Democrat-controlled Senate than in the House, starting with Senate Commerce Committee Chairman Fritz Hollings (D-S.C.).
"I'm troubled by the prospects of the two largest satellite companies becoming one. That kind of consolidation would leave consumers with few, if any, choices. Our committee will continue to look into this and other consolidation-related matters," Hollings said in a statement.
- Paige Albiniak