New York -- DirecTV Inc. chairman and CEO Eddy Hartenstein conceded that his
company would consider divesting of transponder frequencies in order to get its
merger with EchoStar Communications Corp. approved.
Hartenstein, speaking at the Satellite Broadcasting & Communications
Association's SkyForum conference here Wednesday, said divesting of satellite
frequencies is 'something we would look at.'
He added that that he and EchoStar executives met with Federal Communications
Commission officials Tuesday, but he declined to give specifics.
'What we were looking to explain is that we're still very much focused on
trying to make this merger happen,' Hartenstein said. He added that DirecTV is
in the process of providing information to the Department of Justice concerning
the merger, and that it would like to provide the same documentation to the
'We would share these with the FCC in terms of making sure that the merger is
viewed in the best possible light with all of the facts,' he said.
On Monday, EchoStar and Hughes Electronics Corp., DirecTV's parent, filed
documents with the Securities and Exchange Commission regarding their
willingness to make structural changes to the deal to ensure approval by the
FCC. Speculation has been rampant that the FCC and the DOJ will reject the deal
on anti-competitive grounds.
The two potential merger partners also asked the FCC to delay ruling on the
matter until Oct. 28 to give them time to provide the necessary documents.
Hartenstein said he received no commitment from the FCC regarding the Oct. 28
extension. 'We stated our case,' he added. 'No promises were made.'
In the event that the merger is not approved, Hartenstein said, DirecTV will
continue business as usual. Although the company has had to revise its
third-quarter subscriber numbers downward, Hartenstein added that DirecTV has
reiterated its cash-flow and revenue-growth projections for the period.
'We're in better shape than we were a year ago,' he said.
Asked if EchoStar would have the advantage over DirecTV in the event the
merger doesn't take place, Hartenstein disagreed.
'The exchange of information [between EchoStar and DirecTV] has been
bidirectional,' he said. 'We have had as much of an opportunity to look at
EchoStar's books as they have had a chance to look at ours. We've learned more
about each other. I don't think there is damage of any significance to
Hartenstein also said that if no deal is reached by the Jan. 21 cutoff date
agreed to in the merger documents, both parties are willing to walk away from
the deal. However, he added, in that case, EchoStar would have to pay a $600
million breakup fee and would still be obligated to buy PanAmSat Corp. -- of
which Hughes owns 81 percent -- for about $2.7 billion.
'That is clearly in the contract,' Hartenstein said of the breakup fee and
the PanAmSat purchase. 'There is no question about that.'