EchoStar: Local TV in Every Market


Hoping to improve its chances of merging with DirecTV Inc., EchoStar
Communications Corp. promised to provide local TV service in every market within
two years if federal regulators approve the $25.8 billion deal, according to
informed sources.

EchoStar made the announcement Tuesday morning, one day after
Senate Minority Leader Trent Lott (R-Miss.) told a group of broadcasters hostile
to the deal that he had serious concerns about the merger's impact on
competition, particularly in rural areas.

When the merger was announced in October, EchoStar chairman and CEO Charlie
Ergen vowed to provide local TV service in 100 markets (up from about 40 today),
including one market in every state. Under that plan, about 85 percent of all TV
households would have access to local TV signals from EchoStar-DirecTV.

EchoStar is attempting to merge with Hughes Electronics Corp., parent of
DirecTV, which critics have blasted as a merger to monopoly that regulators must

The two direct-broadcast satellite carriers combined would serve at least
14.5 million subscribers, or 90 percent of the DBS market but about 17 percent
of the broader pay TV market dominated by cable operators.

Under the new local TV plan, Ergen is committing to provide local TV service
in all 210 designated market areas. Rolling out the service will take two years
because of lags associated with the construction and launch of new satellites,
sources said.

As a result, EchoStar is planning to announce that due to the merger, every
U.S. household in time will have access to all local TV stations in their home
markets, to at least one dozen high-definition TV channels and to two-way
broadband Internet access via satellite.

The merger requires the approval of the Department of Justice and the Federal
Communications Commission. FCC officials reacted to the merger announcement by
saying it would lead to significant concentration in the DBS market. DOJ
officials conduct a nonpublic review behind closed doors.

The National Association of Broadcasters, a powerful trade association for
hundreds of local TV stations, is fighting the EchoStar-DirecTV merger.

Among other things, the NAB said both companies have the capacity
independently to serve every local TV market today and the merger would
eliminate the race between the two companies to capture market share by serving
additional local TV markets.

EchoStar and DirecTV denied that they have the channels to serve every local
TV market today.

Ergen's commitment to serve every market and to
eventually carry every eligible TV station appeared to be aimed at blunting
the NAB's attack.

'Today's announcement appears to be a step in the right direction, but needs
to be carefully scrutinized to determine its legitimacy,' NAB president Edward O. Fritts said.

'We would have more confidence in the announcement were DirecTV to be the
surviving entity,' he added. 'Broadcasters have had a long and tortured history
of bad-faith dealings with EchoStar and its chairman, Charlie Ergen.
Accordingly, we continue to oppose the merger.'

In his comments to an NAB group Monday at a downtown Washington, D.C., hotel,
Lott said he was not firmly opposed to the merger, but he was leaning against
the deal because he felt that it would reduce DBS competition in rural

EchoStar and DirecTV have attempted to address the
rural-competition issue by announcing support for a national pricing plan, under
which DBS subscribers without cable would pay the same prices as DBS subscribers
who can turn to cable if they dislike EchoStar-DirecTV's service