Pegasus: Halt DBS Merger Review

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Pegasus Communications Corp. wants to slam the brakes on federal review of
the merger between EchoStar Communications Corp. and DirecTV Inc. until EchoStar
provides greater detail about its alliance with Vivendi Universal S.A.

Last month, Vivendi agreed to invest $1.5 billion in EchoStar, which, in
return, committed to launching five Vivendi channels on a nonexclusive basis as
part of a broad alliance between the two firms.

The alliance was announced less than two weeks after EchoStar and DirecTV had
submitted the merger for approval at the Federal Communications Commission in a
filing that said one of the public benefits of the deal was that the new company
did 'not intend to pursue a strategy of vertical integration with programmers
post-merger.'

In a filing Monday at the FCC, Pegasus asked the agency to suspend review of
the EchoStar-DirecTV deal because the EchoStar-Vivendi agreement contradicted
the commitment in the FCC filing not to pursue vertical deals with
programmers.

Both the FCC and the Department of Justice need to approve the merger.
Initial public comments are due at the FCC Feb. 4. Pegasus asked the FCC to
suspend the Feb. 4 comment date for at least 45 days.

Among other things, Pegasus resells DirecTV's service in 41 states to 1.5
million subscribers under an exclusive marketing deal. If the merger were
approved, Pegasus would be in the position of competing against its sole
supplier.

On Dec. 4, Pegasus CEO Marshall Pagon said the EchoStar-DirecTV merger should
be quickly rejected as anti-competitive if the companies fail to ensure the
viability of Pegasus as a competitor.

An EchoStar spokesman said the company would comment shortly. An FCC
spokeswoman was unavailable for comment.

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