RUS: Can DBS Merger Save $1B?

5/21/2002 10:21 AM Eastern

A federal agency is asking whether the proposed merger between EchoStar
Communications Corp. and DirecTV Inc. parent Hughes Electronics Corp. could save
taxpayers a potential $1 billion loan liability.

The agency -- the Agriculture Department's Rural Utilities Service -- is
charged with administering a new program that allows the federal government to
guarantee $1 billion in loans to providers of local TV signals in unserved and
underserved areas in the United States.

The loan program was established in 2000 under the Launching Our Communities
Access to Local Television Act (LOCAL TV).

In an April 30 notice in the Federal Register, the RUS sought comment
on its observation that the LOCAL TV law might become moot because EchoStar has
promised that the new company would offer local TV signals in all 210 TV
markets, likely within 24 months.

'One developing factor that may have a significant impact on the provision of
local TV signals is the recently proposed merger of the two major
direct-broadcast satellite providers,' the RUS said in a two-page notice. 'The
[LOCAL TV] act could be noticeably affected, and its goal virtually fulfilled,
if certain requirements are imposed on the survivor.'

The RUS has opened a notice of inquiry on the merger's impact on the LOCAL TV
law. Comments are due May 30.

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