Good news, bad news for EchoStar - Broadcasting & Cable

Good news, bad news for EchoStar

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The federal government has made quick work of French media giant Vivendi
Universal S.A.'s $1.5 billion investment in EchoStar Communications Corp., with
the Federal Trade Commission giving the deal its stamp of approval without even
reviewing it.

'It's obviously a good result that we're all happy with,' one attorney
involved in the transaction said.

The FTC granted its approval on 'early termination,' meaning before the
30-day review period required by the Hart-Scott-Rodino Act was up.

Also, the Federal Communications Commission has approved EchoStar's
application to launch and operate a spot-beam satellite that will carry the
signals of local TV stations.

EchoStar's application met with some controversy after the National
Association of Broadcasters and Northpoint Technology Ltd. questioned why one of
its spot beams had to be pointed toward Mexico City, but the FCC agreed with
EchoStar that the beam had to be pointed away from the United States or it would
have caused interference.

That's the good news for EchoStar. On the other hand, the direct-broadcast
satellite provider faces a potentially serious threat to its proposed merger
with Hughes Electronics Corp., parent company to its largest competitor, DirecTV
Inc.

Some 30 states' attorneys general, led by Jay Nixon of Missouri, are
considering filing lawsuits within their states opposing the merger.

'There's a large part of the state where satellite is the only option, not
only for television, but for broadband as well,' Nixon spokesman Scott Holste
said.

'If the two satellite companies in existence are looking at merging, that
causes concerns about antitrust and anti-competitive behavior,' he added.

In November, Nixon wrote a letter to Attorney General John Ashcroft (also
from Missouri) expressing his concerns.

'As currently structured, I believe the merger requires [the Department of]
Justice's intervention to protect consumers from a monopoly situation,' Nixon
wrote.

States considering this action include Connecticut, Florida, Iowa, Kentucky,
New York and Pennsylvania, among others.

The states first have to review documents that EchoStar is submitting to them
and to the DOJ before they can file lawsuits.

EchoStar's Washington, D.C., office was picketed Tuesday by the Rev. Al
Sharpton, the Rev. Horace Sheffield III and the National Action Network.

They claimed that EchoStar is discriminating against African Americans by
choosing not to carry Word Network, which showcases black gospel preachers.
Sharpton et al plan to oppose the merger if EchoStar does not agree to carry
Word.

Finally, rival satellite-TV broadcaster Pegasus Communications Corp. has
asked the Federal Communications Commission to stop the clock on its review of
the EchoStar-Hughes merger while the agency gathers more information about the
proposed Vivendi investment.

Pegasus sells DirecTV service in rural areas.

Pegasus president Mark Pagon said at a hearing in the House of
Representatives in November that he is concerned about his company's status as a
rural reseller of satellite-TV services if EchoStar becomes the only
distributor.

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