Analyst Sees D.C. OK of SBC-DirecTV - Multichannel

Analyst Sees D.C. OK of SBC-DirecTV

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SBC Communications Inc.'s potential bid to acquire DirecTV Inc. would have a
"high" chance of obtaining Washington regulatory approval, Legg Mason Inc. media
analyst Blair Levin said Monday.

In a research note, Levin told clients an SBC-DirecTV deal would represent a
"vertical" merger between noncompeting firms that would likely bypass a battle
with the Department of Justice.

Levin cautioned that it was possible that antirust enforcers might question
whether the merger would reduce SBC's financial incentive to upgrade its network
with fiber to provide video in competition with cable operators, as well as
questioning whether the deal would end any hope of DirecTV offering broadband
service.

"The merger would raise some antitrust issues, but none that we find to be a
serious obstacle to approval," said Levin, who accurately predicted serious
regulatory trouble for EchoStar Communications Corp.'s failed bid to acquire
DirecTV parent Hughes Electronics Corp. last year.

SBC spokesman Larry Solomon would not comment on merger prospects with
DirecTV or Hughes, which is 30 percent-owned by General Motors Corp.

"As GM has previously stated, it has several options concerning its ownership
stake in Hughes, and it is the process of evaluating its options," Hughes
spokesman Bob Marsocci said.

SBC's acquisition would transform the regional phone company into the
second-largest pay TV provider in the country, with 11 million subscribers.
SBC's 2002 revenue of $43.1 billion was roughly equal to all 2001 cable-industry
revenue.

In assessing SBC's DirecTV bid on the cable industry, Levin said it would be
a positive in the short run because it would create more uncertainty about
DirecTV's ownership, especially if SBC and News Corp. had to fight for the
prize.

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