Consent-Decree Talks Hearten PrimeStar Inc.


New York -- PrimeStar Inc. sees last week's
discussions with the Department of Justice -- on the specific terms of a consent decree
governing access to 28 transponders at the 110-degrees-west spectrum -- as a "very
positive sign."

So said PrimeStar president and chief operating officer Dan
O'Brien at a SkyForum conference here last week.

Just weeks ago, press reports suggested that the DOJ was
close to denying a proposed deal with News Corp. that would give PrimeStar access to the
high-power direct-broadcast satellite spectrum at 110.

Both the DOJ and the Federal Communications Commission
wonder whether PrimeStar would use the scarce full-CONUS (continental United States) DBS
spectrum to compete with cable.

"We're willing to say, 'Test us,'"
O'Brien said. "We'll prove that we're able to compete."

O'Brien said PrimeStar is willing to consider
"anything that's reasonable" as conditions for a license transfer for the
110 spectrum.

"If the Justice Department said, 'You need to
divest your cable interests,' that's unreasonable," O'Brien said.

A year ago, EchoStar Communications Corp. had a similar
deal with News that would have given EchoStar control of the orbital real estate at 110.
Shortly after that deal fell apart, News announced the proposal to merge its U.S.
satellite assets into PrimeStar.

One likely condition of any consent decree that PrimeStar
would sign with the DOJ would be its divestiture of 11 transponders at 119 degrees west.
Because EchoStar currently controls the remaining 21 transponders there, it covets those

"We believe that PrimeStar will do everything in its
power to keep 119 from us," Charlie Ergen, chairman and CEO of EchoStar, told
reporters last week.

Separately, O'Brien said, "If EchoStar wants to
buy our satellite and it wants to pay market price, we'd consider it." PrimeStar
wants to sell off a high-power satellite with the 119 spectrum.

PrimeStar's merger with News is valued at $3 billion.
With that kind of investment, O'Brien said, it doesn't make sense for PrimeStar
not to compete with cable.

Since 110 is one of only three full-CONUS DBS slots, and
DBS has proven to be the most viable competitor to cable, the government will likely seek
more than just promises from PrimeStar.

One condition that has come up, O'Brien said, is
giving the DOJ approval of PrimeStar's independent board members. Currently, two of
the 11 board positions are for independents. Adding another nine independents,
O'Brien said, would change the governing process "dramatically."

O'Brien said he's willing to discuss conditions
whereby only the independent directors could vote on such things as the annual marketing

PrimeStar believes that it will take another six to eight
weeks to receive a decision from the DOJ.

A DOJ spokesman declined to comment.

Ted Hearn contributed to this story.