As two huge media mergers await action, Charles A. James caught some people by surprise last week by announcing he'll step down as chief of the Justice Department's Antitrust Division later this year.
James, who joined Justice on June 14, 2001, is resigning to join ChevronTexaco Corp. as vice president and general counsel. The San Francisco-based oil giant said James, 48, is to assume his post on Dec. 9.
James is reviewing the proposed merger of direct-broadcast satellite providers EchoStar Communications Corp. and DirecTV Inc. parent Hughes Electronics Corp., and the separate merger between cable operators AT&T Broadband and Comcast Corp.
In recent weeks, published reports have said that staff at both Justice and the Federal Communications Commission have recommended the DBS merger be rejected as anticompetitive.
But industry sources maintained that rejection of the deal as proposed did not automatically foreclose approval of a restructured deal.
EchoStar has a big incentive to cooperate with regulators. If the federal government rejects the deal, EchoStar would owe Hughes, a unit of General Motors Corp., a $600 million breakup fee. Additionally, DirecTV could then fall into the hands of News Corp. chairman Rupert Murdoch, who has been lobbying aggressively against the deal.
James himself recently telegraphed potential problems with the DBS merger by telling a Senate subcommittee that the transaction was "at best … a three-to-two merger and … in some instances a two-to-one merger."
Yet, it was unclear from Justice's announcement whether James would step down before he had completed his work on the media mergers. DOJ press aides would not provide a specific date for James's departure.
A former Justice Department official said the uncertainty surrounding James's departure was unusual. Normally, a DOJ official who is returning to the private sector leaves promptly, and the attorney general then names an acting antitrust chief.
"There is no question there is some awkwardness, having accepted employment in the private sector," the former Justice official said. But the movement of political appointees between government and the private sector is not a science, the official noted.
The cable merger is not expected to encounter much difficulty. In fact, AT&T and Comcast have said that Justice can't stop the transaction from closing.
The DBS merger is considered more problematic because millions of rural Americans would see their options for direct-to-home satellite-delivered multichannel video programming shrink from two providers to one.
EchoStar and DirecTV have maintained that the benefits of the deal outweigh the harms. If allowed to merge, the companies have promised to offer local TV signals in every U.S. market within two years, provide 12 channels of high-definition programming and offer two-way high speed data service to millions of Americans in remote areas that phone and cable companies would find too expensive to wire for broadband.
EchoStar spokesman Marc Lumpkin said the company "continues to work with the DOJ and the FCC in their ongoing review of the merger. We believe the merger is good for consumers and should be approved based on its compelling merits."