Now on Channel 741
The come-from-behind bid by Charles Ergen’s EchoStar satellite TV to swallow General Motors’ DirecTV and choke media magnate Rupert Murdoch’s global communications ambitions has all the makings of a dramatic TV series beamed down on the satellite signals these guys are fighting to control.
Imagine pitching a series with this cast: Charlie Ergen is a penny-pinching former CPA and pro blackjack player from the mountains of Tennessee who traveled the country with his wife, Candy, peddling large C-band satellite dishes from a pickup truck. From an office furnished with rummage-sale couches, he’s compiled a fortune of about $7billion. But until two months ago nobody wanted to talk to him, least of all the GM executives who control Hughes Electronics, DirecTV’s owner in El Segundo.
The GM crowd is, well, a bunch of Detroit business suits in Chevrolets trying to finally extract the nation’s largest car maker from 15 years of spotty diversification. And Murdoch is the maverick Australian media baron whose News Corp. owns, among other things, the Fox TV network. He needed only DirecTV to complete his almost global network of satellite companies.
Murdoch, who had already rented a ballroom for his victory announcement, is unaccustomed to losing. But in a $25-billion deal announced last week, Ergen eked out a narrow win over the Aussie mogul to merge DirecTV and EchoStar, creating a single U.S. company beaming TV and music signals from 22,000 miles in space down to nearly 17million U.S. subscribers with pizza-platter dishes tacked onto their homes.
At a monthly subscriber rate of, say, $31.99, that’s not chump change. It’s also enough to make AT&T; Broadband, the nation’s largest cable TV provider with 15million subscribers, look smaller and perhaps seriously consider merging with another cable provider, such as Comcast with its 8million subscribers.
The complex EchoStar deal creates a panoply of regulatory, legal, political and even mechanical challenges to be argued, lobbied and decided in coming months. Murdoch’s representatives are already trying to poison the Washington well. Some consumer groups suggest the merger leaves rural residents at the mercy of one TV provider, (as urban cable subscribers were until the invention of small dishes).
Ergen, the upstart who once argued against consolidation, vows not to charge rural subscribers more than city dwellers and sees his powerful satellite provider as a healthy counter to an agglomerating cable industry.
Legal horse trading and rapidly advancing technologies will likely moot and mute some of today’s concerns. Still, the deal merits the closest examination by regulators, who must remember the alternative is Murdoch’s continued international consolidation of market power.
The struggle will provide important precedents, as well as set the stage for a titanic business conflict more entertaining than much of what is carried on hundreds of TV channels.
