- The Washington Times - Friday, December 14, 2001

EchoStar Communications Corp.'s purchase of Hughes Electronics Corp. would create a satellite behemoth controlling 90 percent of the satellite television market and have nearly 17 million subscribers.

While that may raise concern among the regulators who will decide whether the proposed $32 billion purchase of Hughes passes muster, EchoStar Chief Executive Charlie Ergen says one large satellite company is better suited to compete with the juggernaut that is the cable television industry.

"We believe the marketplace is better with one strong satellite provider to go after the entrenched cable industry," Mr. Ergen told reporters and editors of The Washington Times yesterday.

"If we are an effective competitor, you will not see cable rates continue to go up," he said.

About 80 percent of pay-television customers get service through cable companies, like AT&T Corp., whose cable subsidiary has 14.4 million subscribers. It the nation's largest cable provider.

The Justice Department and the Federal Communications Commission will review EchoStar's proposed purchase of Hughes, the El Segundo, Calif., company that markets satellite-television service under the DirecTV brand.

The deal has a greater chance of earning approval if regulators view a combined EchoStar-Hughes as competing in the larger cable and satellite market, Mr. Ergen said. If regulators view the combined company simply as a larger satellite firm, then the deal could be spiked, he said.

Opponents of the deal have said EchoStar's takeover would create a monopoly that could harm consumers in rural areas. That is because cable companies typically don't build in rural areas, leaving EchoStar, based in Littleton, Colo., as the only option for millions of consumers.

"Rural America deserves a diversity of television programming choices and a wide variety of advanced telecommunications services, not a single, monopoly satellite provider," said Bob Phillips, National Rural Telecommunications Cooperative president, during a hearing of the House Judiciary Committee's subcommittee on telecommunications last week.

"We firmly believe that the merger of two highly successful [satellite] companies into one monopoly provider is so inconsistent with the interests of rural Americans that it should not be permitted in its current form," Mr. Phillips said.

About 13 million homes in rural America are not wired for cable television, according to the Consumers Union, an advocacy group in the District.

Mr. Ergen, whose 51 percent share of EchoStar would be diluted to about 15 percent after the merger, said the company wants to allay fears that it will engage in price gouging by offering a nationwide flat rate for consumers.

EchoStar, with 6.4 million subscribers, is smaller than the Hughes satellite television company, which has 10.3 million subscribers. But Hughes' owner, General Motors Corp., has long been searching for a buyer so it could generate cash to shield it from a soft economy.

GM had been in talks with News Corp. owner Rupert Murdoch, who also controls satellite company British Sky Broadcasting Group, before Mr. Ergen arranged financing and swooped in.

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