Washington - EchoStar Communications Corp.'s proposed merger with DirecTV
Inc. would cause 'significant concentration' but perhaps not run afoul of
anti-trust laws, Federal Communications Commission member Kathleen Abernathy
Abernathy, a Republican, said the merger represents consolidation in the
direct broadcast satellite market but DBS competition with cable could determine
whether the deal is considered legal.
'That is sort of the big key,' Abernathy said. 'What's the market? Is it just
the market for satellite-to-home television or the multichannel viewer market
and then your competitors are cable?'
EchoStar and DirecTV filed for approval of the $25.8 billion deal last week
at the FCC. FCC chairman Michael Powell, who also raised concerns about the
deal's impact on competition, has organized a team of agency officials to review
EchoStar chairman and CEO Charlie Ergen has said the merger is necessary to
help DBS compete with cable, which controls about 80 percent of the pay-TV
market compared with 17 percent for DBS.
'Significant concentration doesn't mean it's something that can't happen,'
Abernathy told reporters in her office. 'In this instance you have both of the
parties who are providing satellite-to-home TV merging. Now whether that is okay
or not okay remains to be seen.'
Abernathy said the FCC should coordinate its merger review with the Justice
Department. FCC review could take as little as three to six months, she said, in
keeping with Powell's view that the FCC has taken too long in reviewing mergers
in the past.
On other topics, Abernathy said:
· The FCC is moving forward in deciding the regulatory classification of
cable-provided Internet access, promising a decision by early next year. She
said she has not decided whether high-speed cable data service is a cable
service, an information service or a telecommunications service. 'I think I am
not ready to say yet,' she said.
· The FCC would launch three rulemakings designed to determine whether
broadband services provided by phone companies are unregulated information
services and to understand the impact of such a classification on funding the
program to keep local phone service affordable for all Americans.
· She had not reviewed a decision last week by the FCC's Cable Services
Bureau which denied a Houston TV station's right to demand access to DirecTV for
the next four yeras because the TV station mailed its must carry election one
day late. 'I have not read that decision. It's a bureau decision. I would guess
we are going to see an application for review,' she said.
· She wasn't troubled about perhaps having to review a large cable merger
even though the FCC is not enforcing cable ownership limits. 'That's awfully
hypothetical. I can't be troubled by something that hasn't happened,' she