EchoStar, Hughes Seek to Delay Ruling

In an apparent last-ditch effort to salvage their merger, EchoStar Communications Corp. and Hughes Electronics Corp. asked the Federal Communications Commission on Monday to delay its review so the companies can discuss the possibility of major revisions.

The two satellite TV providers, in a letter filed Monday, also asked the agency to hold a public hearing on the merger before completing its review.

Officials at the FCC, which had been poised to block the deal as early as this week, declined to comment. But sources inside the agency dismissed the letter--particularly the sudden interest in a public hearing--as a transparent delaying tactic and vowed to move forward as scheduled.

A majority of FCC commissioners are prepared to block the deal, but a vote is not expected until Wednesday because EchoStar Chairman Charlie Ergen was scheduled to meet with some commissioners today.

EchoStar’s proposed $15-billion purchase of satellite rival DirecTV and its parent, Hughes, was announced a year ago. If approved, the merger would combine the No. 1 and No. 2 satellite TV providers and create a pay-television giant reaching 18 million customers.

Analysts were not surprised that Ergen would launch a last-minute campaign to save the deal.

“No eleventh-hour concessions can change the simple fact that this merger would create a monopoly, leading to higher prices ... especially in rural America,” said Adam Schwartz, a vice president of the National Rural Telecommunications Cooperative, a reseller of DirecTV in rural markets.

EchoStar spokesman Marc Lumpkin said the company wants more time to discuss the possibility of making changes to the merger that would address the concerns of regulators. But he cautioned that EchoStar has not promised to make any revisions--only to talk about the possibility of making them. He declined to comment on what sort of concessions the companies might offer.

In the letter, the companies said the changes would go beyond a previous promise to offer a national pricing plan to ensure that rural customers are not hurt by the loss of competition.

One concession Ergen may offer is to give up some of the combined company’s satellite slots. New York-based Cablevision Systems Corp. has offered to take over some EchoStar-DirecTV frequencies and create a rival satellite firm, but EchoStar has been cool to the offer. EchoStar attorneys said they had set up a schedule with the Justice Department--which also must approve the deal--to discuss possible changes, and they plan to present “structural remedy proposals” to Assistant Atty. Gen. Charles James on Oct. 28. They asked the FCC to delay its ruling until after the Justice Department has acted.

Traditionally, the FCC does not complete its merger review until the Justice Department decides whether a deal violates antitrust law. But FCC Chairman Michael K. Powell has said he would release a decision as soon as it is ready.

EchoStar’s shares closed Monday at $17.02, up 7 cents on Nasdaq. Hughes’ shares fell 7 cents to close at $8.92 on the New York Stock Exchange.