DBS Merger Frets Small Ops

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Small cable operators fear that the proposed merger between EchoStar
Communications Corp. and DirecTV Inc. will drive up their program-acquisition
costs and make them less competitive against the direct-broadcast satellite
giant.

Matt Polka, president of the American Cable Association, predicted that if
the DBS merger goes through and the new company can cut its programming costs,
program networks will look to small cable operators to make up the revenue.

EchoStar chairman and CEO Charlie Ergen 'himself announced that the new
company expects to save $600 million to $700 million in annual programming
costs. That's a lot of annual revenue for programmers to lose, especially now
that advertising revenues are way, way down,' Polka said in a column to be
published in the upcoming issue of the ACA's magazine.

Polka added: 'I wonder where the programmers will try to make up this
difference? Dare I say on the backs of the customers of competitors, like
independent cable?'

Last Monday, EchoStar and DirecTV's parent, Hughes Electronics Corp., agreed
to merge in a deal valued at $25.8 billion.

The new company, with 16.7 million subscribers, would become the nation's
largest distributor of multichannel-video programming.

In the column, Polka promised that the ACA would be 'very active' in
Washington, D.C., when regulators and Congress start to review the deal.

The association -- which represents 900 operators with 7.5 million
subscribers -- was active during the Federal Communications Commission's review
of America Online Inc.'s merger with Time Warner Inc.

Prior to FCC approval, the companies agreed not to link the sale of their
cable networks to small-MSO carriage of AOL's high-speed Internet-access
service.

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