GAO: Local signals don't affect pricing


Direct-broadcast satellite provision of local-TV-station signals increases DBS-penetration rates but
does not affect cable pricing, according to a General Accounting Office report to the Senate Antirust
Subcommittee released Wednesday.

The report looked at DBS and cable services in light of the proposed merger
of EchoStar Communications Corp. and DirecTV Inc., which the Department of Justice
moved to block Wednesday (the FCC has already come out against the merger).

While coming to no conclusion on the merger, the report concluded both that
DBS is able to compete more effectively for subscribers in markets where it can offer
local broadcast channels, and that DirecTV and EchoStar are not currently able
individually to offer local stations in all markets.

Although that might suggest that the merger would strengthen DBS as a
competitor to cable, the study drew no such conclusion. It suggested instead
that the companies' current inability to do local-into-local might be overcome,
saying that the economic benefits to the individual companies of offering local
signals in all 210 TV markets may ultimately outweigh the costs.

The study also found that for a majority of customers, high-speed Internet
service was not a deciding factor in choosing one service over the other.

Both the FCC and the DOJ received copies of the report, dated Oct. 15, with
requests for comment. Both declined, saying it was inappropriate given the
merger's status, which was then still under review at the DOJ although the FCC
had already decided not to support it.