The federal government should turn over a satellite license to Cablevision Systems Corp. as a condition for approving the merger of EchoStar Communications Corp. and DirecTV Inc. parent Hughes Electronics Corp., the cable company said in a July 11 government filing.
Cablevision wants to take almost full control of a direct-broadcast satellite orbital position that it shares with EchoStar. Although Cablevision plans to launch a satellite service in late 2003, the company said it can't provide robust competition to a post-merger EchoStar unless it can use nearly all available frequencies at the satellite slot.
Cablevision said its proposal would not disrupt service to EchoStar subscribers if the transfer occurred in an orderly fashion. The satellite in question is a "wing-slot bird" that EchoStar uses to provide international and niche services to a limited number of subscribers who require a second reception dish, Cablevision said.
In the July 11 FCC letter, Cablevision did not indicate whether it planned to compensate EchoStar for the license, or if it wanted the FCC to require EchoStar to transfer the frequencies to Cablevision at no cost.
A Cablevision spokesman declined to provide further details related to the filing. EchoStar spokesman Marc Lumpkin also declined comment.
As the industry's representative, the National Cable & Telecommunications Association does not involve itself in media mergers, at least overtly. From time to time, individual MSOs will intervene in a merger. AT&T Corp. sought merger conditions against America Online Inc. and Time Warner Inc., for example.
With the additional spectrum, Cablevision has told the FCC that its satellite would be capable of serving 143 local TV markets, offering scores of national and local programming channels and perhaps turning the company into a cable-affiliated DBS competitor to other cable incumbents around the U.S.
Cablevision's proposal to take nearly complete control of an EchoStar satellite position might actually help EchoStar in its merger with DirecTV. The transaction has been attacked as anticompetitive, because it would eliminate DBS competition.
Cablevision's DBS plan counters those arguments.
"Any competition out there right now, either in the form of a grain of sand or a giant boulder, is going to help EchoStar-DirecTV deflect anti-merger criticism," said Jimmy Schaeffler, a cable and DBS analyst with the Carmel Group.
But Schaeffler indicated that Cablevision might not have the financial strength now to see its satellite plans realized.
"It's a tough time to push something like this through. Until Cablevision gets a satellite launched, I'm going to have my doubts," Schaeffler said.