NCTA Takes a Pass on DBS Merger
By Ted Hearn -- Multichannel News, 12/5/2001 6:02:00 AM
The cable industry's main trade association will leave it up to regulators to decide whether EchoStar Communications Corp. should be allowed to merge with DirecTV Inc. and create a company with 90 percent of the direct-broadcast satellite market.
Testifying on Capitol Hill Tuesday, National Cable & Telecommunications Association president Robert Sachs declined to support or oppose the $25.8 billion merger, which was the subject of two House hearings lasting a combined five-and-a-half hours.
'We do not seek to gain competitive advantage by imposing regulatory conditions on competitors, and we believe any antitrust issues raised by the merger are best left to resolution by expert agencies,' Sachs told the House Subcommittee on Telecommunications and the Internet.
Sachs' statement was notable because EchoStar chairman and CEO Charlie Ergen, in testimony before the subcommittee and the House Judiciary Committee, targeted cable's dominance as the driving force behind the need to merge with DirecTV to form a multichannel-video-programming provider with at least 14.9 million subscribers.
Sachs' decision to keep the NCTA out of the merger fight -- unlike the National Association of Broadcasters, which wants the deal killed -- came at a time when the cable industry might be going through another round of consolidation that could spark controversy; namely, the potential sale of AT&T Broadband to AOL Time Warner Inc., Cox Communications Inc., Comcast Corp. or some combination of those cable MSOs.
Facing an array of opponents and plenty of skeptical lawmakers, Ergen said the merger would propel the company to serve 100 markets (up from 40) with local TV signals, provide 12 channels of high-definition TV and create a robust platform to provide high-speed Internet access.
He added that after the merger, the company would control just 17 percent of the pay TV market, compared with cable's roughly 80 percent share.
Ergen promised to protect rural customers without access to cable by offering them the same rates, terms and conditions as those offered to satellite customers with access to cable -- a commitment he made when the deal was announced Oct. 29.
'I think their choice will be reduced. That's why I think it's important to have safeguards in place,' Ergen told the Judiciary Committee.
The only lawmaker who threw his full support behind the deal was Rep. Rich Boucher, a Democrat who represents a rural district in southwestern Virginia, where he said thousands of homes unserved by cable need a satellite carrier to bring in the best in video programming, local TV signals and high-speed Internet access service.
In addition to the NAB, small-MSO trade group the American Cable Association announced opposition to the merger.
Former Federal Trade Commission chairman Robert Pitofsky also voiced opposition, calling the merger the creation of a satellite monopoly protected by high entry barriers.
'No one is going to come in to alleviate that condition,' he told the House Judiciary Committee.
Late Monday, EchoStar and DirecTV filed an application for merger approval with the FCC. Both the FCC and the Department of Justice have to approve the deal.
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