States May Sue to Block Deal Between EchoStar and Hughes

Several state attorneys general are discussing the possibility of filing suit to block satellite television provider EchoStar Communications Corp.’s bid to buy rival Hughes Electronics Corp., an official with Missouri’s attorney general said Monday.

As many as 30 attorneys general are conducting “due diligence” to decide whether the proposed combination of the two biggest satellite TV companies would hobble competition in the pay television market, said Chuck Hatfield, an assistant to Missouri Atty. Gen. Jay Nixon.

“There are several attorneys general who are deeply concerned about the proposed merger who are convinced, based on what we know so far, that the merger is anti-competitive and should be stopped,” Hatfield said.

But Hatfield said the states have made no final decision about whether to sue. “We’re going through a process to try to make sure we have a good understanding of the details in the market and the technology,” Hatfield said.

Some of the states are especially concerned about how the deal would affect rural areas where many residents have no access to cable television and are more dependent on satellite TV.

Antitrust enforcers at the Justice Department are reviewing the deal, along with the Federal Communications Commission.

Some U.S. lawmakers and regulators have said they’re concerned that allowing the No. 1 direct broadcast satellite firm, DirecTV, and No. 2 EchoStar to combine would reduce the number of competitors in the pay-television market from three to two.

In rural areas where cable television is not available, critics argue, the merged company would end up with a monopoly.

Spokesmen for EchoStar and Hughes said the companies are cooperating with the states and said the discussions are routine. “They’re in a learning mode,” said EchoStar spokesman Mark Lumpkin. “Once we’re able to discuss it with them, we think they’ll see the numerous benefits the merger provides, especially in rural areas.”