This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
The Biggest Cable Hookup
2002-10-08

wo birds want to join forces and the FCC is about to cry "fowl." We mean "foul." The two dominant direct broadcast satellite players want to join forces, the better to compete with Big Cable. Federal regulators, both the FCC and the Justice Department, are concerned that the resulting conglomerate of DirecTV with Dish Network would command roughly 95% of satellite service in the US.

The press could not settle on a price tag for the proposed merger between EchoStar Communications and Hughes Electronics -- it was described as being worth anywhere from $15 billion and $25 billion. It was a challenge to keep the players straight, as some outlets talked of a merger between the corporate parents, and others referred to the service monikers. Hughes is DirecTV and EchoStar is Dish. All straight?

The two companies sent a letter to the FCC urging them to hold off ruling on (read, rejecting) the merger until the Justice Department has spoken. EchoStar and Hughes offered unspecified "major revisions" to the deal that they want to discuss with Justice in the next weeks.

The Wall Street Journal delved deeply into the form those revisions could take -- specifically, selling some frequencies to Cablevision. The Journal reported that Cablevision has wanted to get into the satellite business for 10 years and outlined the cable company's plans and past spending on such a project.

TheStreet.com turned in an extensive analysis of the deal for investors in the satellite space. It seems the market for expanded-service television may be nearing saturation. TheStreet.com quoted an analyst's report which concluded, "Consumers should benefit from ... continued rivalry, but shareholders may realize much smaller returns."

The New York Times and the Journal both mentioned Rupert Murdoch waiting in the wings. Last year Murdoch's News Corp. bid for DirecTV, but lost out at the last minute to EchoStar. If the current deal falls through, he'll be back. - Keith Dawson

EchoStar and Hughes Propose Concessions in Bid to Save Deal
http://online.wsj.com/article/0,,SB103403314258094560,00.html
(Paid subscription required)

Regulators Set to Block EchoStar's Hughes Purchase
http://online.wsj.com/article/0,,SB1033939901346228393,00.html
(Paid subscription required)

'Last-ditch effort' (Rocky Mountain News)
http://tinyurl.com/1upi

EchoStar, Hughes See a Glimmer of Hope
http://www.thestreet.com/tech/georgemannes/10046366.html

F.C.C. Asked to Put Off Merger Ruling
http://www.nytimes.com/2002/10/08/business/media/08BIRD.html

EchoStar, Hughes ask FCC to defer decision
http://www.nypost.com/business/59145.htm

EchoStar, Hughes offer merger changes (Reuters)
http://news.com.com/2100-1023-961138.html

Delay in satellite-TV merger OK requested (AP)
http://www.bayarea.com/mld/mercurynews/business/4236430.htm

EchoStar, Hughes Seek to Delay Ruling
http://www.latimes.com/technology/la-fi-echo8oct08,0,3454976.story

EchoStar pleads to FCC on merger (Denver Post)
http://tinyurl.com/1ut7