Hatch to Ashcroft: Scrub DBS Merger

Author:
Updated:
Original:

Sen. Orrin Hatch (R-Utah) told the Department of Justice the merger between
EchoStar Communications Corp. and DirecTV Inc. raises so many anti-competitive
concerns that the deal likely merits rejection.

Hatch, the ranking Republican on the Senate Judiciary Committee, who has been
friendly to broadcasters over the years, spelled out his concerns in a
three-page letter Jan. 25 to Attorney General John Ashcroft.

In the letter, Hatch offered nothing in the way of support for the deal.

The $25.8 billion merger, Hatch said, would result in a direct-broadcast
satellite monopoly in rural America and 'a satellite/cable duopoly in most of
the cities, towns and suburbs across the country.'

Congress, he added, has tried to promote DBS-cable competition over the
years, and the merger, if approved, 'could stifle this market-driven DBS
competition.'

EchoStar chairman and CEO Charlie Ergen has said that the merger is needed to
battle the dominant cable industry, to offer local TV signals in 100 markets, to
provide one-dozen high-definition TV channels and to establish a robust
high-speed-data platform so rural Americans can enjoy broadband access the same
way urban dwellers do.

Hatch said many of the benefits of the deal espoused by EchoStar and DirecTV
-- such as extending the provision of local TV signals from 40 markets to 100 --
seemed less than compelling.

'New `spot-beam' satellites will provide additional channel capacity for both
EchoStar and DirecTV without sacrificing the benefits of competition,' he
added.

Hatch also questioned whether the merger was indeed necessary to furnish
high-speed Internet access to areas not served by cable and other wireline
providers.

Because EchoStar and DirecTV are both moving ahead with separate plans to
offer broadband, he said, it wasn't clearly necessary for the companies to
combine and eliminate one of two providers of satellite-delivered Internet
access.

'We need to guard consumer freedom to access any broadband Web site of their
choice. And in rural America, like much of Utah, where high-quality broadband
wires do not reach, the only real broadband option is satellite,' Hatch
said.

Hatch's letter tracked closely with the views of Rupert Murdoch's News Corp.
and the National Association of Broadcasters. Both News Corp. and the NAB are
vigorously opposing the merger, both in private and public.

'We agree with Sen. Hatch that the DOJ should review this pending merger
carefully and expeditiously,' EchoStar spokesman Marc Lumpkin said.

'EchoStar has requested meetings with Sen. Hatch, and we hope he and his
staff find time to meet with us so we can explain the numerous benefits of the
merger, such as providing his constituents in the entire state of Utah, as well
as the nation, competitive rates to cable and a faster introduction of
high-speed Internet via satellite,' he added.

Related