- The Washington Times - Friday, November 1, 2002


The Justice Department filed a lawsuit yesterday to block a $22.6 billion merger between EchoStar Communications Corp. and Hughes Electronics Corp. that would have created the nation's largest pay-television service.

The department said the merger would eliminate competition between the two largest satellite-television companies and harm consumers across the country. The opposition comes despite concessions EchoStar offered last week to bolster a rival company and avoid concerns about a potential monopoly.

"This merger would give EchoStar control of the skies for the provision of video programming by satellite, leaving customers to suffer from the resulting reduction of competition," said Charles James, assistant attorney general in charge of the antitrust division.

Mr. James said the deal would create a monopoly in tens of millions of rural homes where cable television doesn't reach, and reduce choices in other areas. Twenty-three states, the District of Columbia and Puerto Rico joined in the lawsuit.

Richard Dore, a spokesman for Hughes, and EchoStar spokesman Marc Lumpkin declined to comment.

The Federal Communications Commission had already voted unanimously to oppose the merger, saying it would create a monopoly that would have "staggering" adverse effects for consumers. The Justice Department's review was focusing on potential antitrust implications.

Officials from EchoStar met with Justice Department attorneys for several hours last Friday to discuss proposals to save the foundering deal and said they remained committed to seeing the deal through.

EchoStar, based in Littleton, Colo., runs Dish Network, while El Segundo, Calif.-based Hughes operates DirecTV. Together, they serve about 18 million subscribers and would be the largest pay-television service, although they would be overtaken if a merger of cable TV giants AT&T and Comcast is approved.

EchoStar and Hughes argued the merger will allow them to compete with cable companies.

To address concerns about the merger, EchoStar had agreed to sell or lease its own satellites to Cablevision Systems Corp., based in Bethpage, N.Y. That concession would have given Cablevision the capacity to deliver programs nationwide.

Today, Cablevision delivers cable programs to 3 million customers in the New York metropolitan area.

Now that the Justice Department has filed a lawsuit, EchoStar and Hughes can still make its case in federal court that the deal should go forward. Such efforts have been successful in the past.

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