Lawmakers Urge Rejection of Satellite TV Deal

A group of Western lawmakers is urging the Federal Communications Commission and the Justice Department to reject a proposed merger between two satellite television giants, arguing that the deal would hurt their rural constituents.

By reducing the number of providers, the proposed $26-billion merger of EchoStar Communications Corp. and DirecTV would put rural subscribers--who can’t subscribe to cable because lines have not been laid there--at the mercy of a monopoly and drive up prices, 15 Western House members wrote in a letter Friday.

“In the EchoStar-DirecTV case, the result for rural America will be a monopoly with essentially no hope of future entrants in the marketplace,” the legislators said in their letter to Atty. Gen. John Ashcroft and FCC Chairman Michael Powell.

Ashcroft and Powell have to give their blessings to the merger for it to occur. A decision is expected by midyear.

Rep. Chris Cannon (R-Utah), vice chairman of the Western Caucus, said he was astonished that the two companies would push such a flawed merger.

“It is hard to imagine a more clear-cut example of a merger that violates our competition laws,” Cannon said.

“This merger as proposed is unthinkable and it should not take the Justice Department and FCC much time to deny it.”

Judianne Atencio, spokeswoman for Littleton, Colo.-based EchoStar, said the merger would help bring rural America high-speed satellite Internet, high-definition television stations and interactive distance learning programs they can’t get now.

“We believe that once government officials and some of these rural special-interest groups really examine some of the issues surrounding this merger, they’ll not only approve of it but extol it to others because of the many benefits that the combined company can offer to consumers,” she said.

Atencio also said the national pricing plan that is part of the merger would ensure that rural subscribers don’t pay more than their urban counterparts.

EchoStar, which runs the Dish Network, said in October that it planned to buy Hughes Electronics Corp., the El Segundo-based parent of DirecTV.

DirecTV is the largest satellite TV operator, with 10.3 million subscribers. At the time the deal was valued at $26 billion.

If the deal goes through, EchoStar will control about 90% of the U.S. digital satellite TV market and have about 17 million subscribers--more than AT&T; Corp., the nation’s leading cable TV provider.

The House members said such a monopolized market would not offer any incentive to innovate or meet consumer needs.

The letter was signed by 16 lawmakers, including Reps. Randy “Duke” Cunningham (R-San Diego), Howard P. “Buck” McKeon (R-Santa Clarita), Richard W. Pombo (R-Tracy) and Wally Herger (R-Marysville).

Shares of Hughes Electronics tracking stock rose 1 cent to $16.26 on the New York Stock Exchange on Friday. EchoStar shares climbed 10 cents to $28.59 on Nasdaq.