NCTA Takes a Pass on DBS Merger

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The cable industry's main trade association will leave it up to regulators to
decide whether EchoStar Communications Corp. should be allowed to merge with
DirecTV Inc. and create a company with 90 percent of the direct-broadcast
satellite market.

Testifying on Capitol Hill Tuesday, National Cable & Telecommunications
Association president Robert Sachs declined to support or oppose the $25.8
billion merger, which was the subject of two House hearings lasting a combined
five-and-a-half hours.

'We do not seek to gain competitive advantage by imposing regulatory
conditions on competitors, and we believe any antitrust issues raised by the
merger are best left to resolution by expert agencies,' Sachs told the House
Subcommittee on Telecommunications and the Internet.

Sachs' statement was notable because EchoStar chairman and CEO Charlie Ergen,
in testimony before the subcommittee and the House Judiciary Committee, targeted
cable's dominance as the driving force behind the need to merge with DirecTV to
form a multichannel-video-programming provider with at least 14.9 million
subscribers.

Sachs' decision to keep the NCTA out of the merger fight -- unlike the
National Association of Broadcasters, which wants the deal killed -- came at a
time when the cable industry might be going through another round of
consolidation that could spark controversy; namely, the potential sale of
AT&T Broadband to AOL Time Warner Inc., Cox Communications Inc., Comcast
Corp. or some combination of those cable MSOs.

Facing an array of opponents and plenty of skeptical lawmakers, Ergen said
the merger would propel the company to serve 100 markets (up from 40) with local
TV signals, provide 12 channels of high-definition TV and create a robust
platform to provide high-speed Internet access.

He added that after the merger, the company would control just 17 percent of
the pay TV market, compared with cable's roughly 80 percent share.

Ergen promised to protect rural customers without access to cable by offering
them the same rates, terms and conditions as those offered to satellite
customers with access to cable -- a commitment he made when the deal was
announced Oct. 29.

'I think their choice will be reduced. That's why I think it's important to
have safeguards in place,' Ergen told the Judiciary Committee.

The only lawmaker who threw his full support behind the deal was Rep. Rich
Boucher, a Democrat who represents a rural district in southwestern Virginia,
where he said thousands of homes unserved by cable need a satellite carrier to
bring in the best in video programming, local TV signals and high-speed Internet
access service.

In addition to the NAB, small-MSO trade group the American Cable Association
announced opposition to the merger.

Former Federal Trade Commission chairman Robert Pitofsky also voiced
opposition, calling the merger the creation of a satellite monopoly protected by
high entry barriers.

'No one is going to come in to alleviate that condition,' he told the House
Judiciary Committee.

Late Monday, EchoStar and DirecTV filed an application for merger approval
with the FCC. Both the FCC and the Department of Justice have to approve the
deal.

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