U.S., States Sue to Block DirecTV Merger

EchoStar Communication Corp.’s yearlong bid to take over satellite rival DirecTV appeared all but over last week as state and federal antitrust officials -- unimpressed by some last-minute concessions -- sued to block the merger.

The decision is likely to set off a series of intense legal maneuvers by the two satellite-TV rivals over $600 million in breakup fees tied to the failed merger.

The Justice Department and attorneys general for California and 22 other states determined that a combination of the nation’s two satellite-TV providers would lead to higher prices, poorer service and reduced incentive for innovation. Three weeks ago, the Federal Communications Commission rejected the deal on similar grounds.

Although EchoStar and DirecTV’s parent, Hughes Electronics Corp., have the legal right to press their case in court, the unusual one-two punch by the government makes it highly unlikely that the companies can salvage the $18-billion deal, analysts say.