SBCA Chairman Quits Over DBS Merger

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The chairman of the Satellite Broadcasting & Communications Association
abruptly resigned Dec. 21 in a dispute over the group's endorsement of the
merger between EchoStar Communications Corp. and DirecTV Inc.

Stan Kozlowski quit moments before the SBCA's executive committee voted to
support the merger.

Kozlowski is senior vice president of sales and marketing for the National
Rural Telecommunications Cooperative, a group on record as saying that the
merger threatens competition in the pay TV market.

Kozlowski was immediately replaced by DirecTV chairman and CEO Eddy
Hartenstein.

In a statement, Kozlowski said he stepped down for two reasons. He questioned
whether the SBCA should take a position on an industry merger and whether the
group was violating its bylaws by voting on the deal.

The SBCA is the direct-broadcast satellite industry's leading trade
association and Washington lobbying arm.

'This action may violate the purpose and rule of the SBCA,' Kozlowski said.
'A member of the committee asked if we could investigate whether the action
would be in keeping with the association's charter. However, the committee voted
not to take the time to consider this issue. At that time, I felt I had no
choice but to resign.'

The NRTC was an early backer of DirecTV, investing about $100 in million in
return for exclusive distribution rights in rural territories with 7 million
homes. Pegasus Communications Corp., the NRTC's largest member, has 1.8 million
subscribers in 41 states.

The NRTC and Pegasus are troubled that the merger would force them to obtain
programming from their chief competitor and deny them access to the full range
of services the merged company would offer to its own subscribers.

The $25.8 billion merger, announced Oct. 29, requires the approval of the
Federal Communications Commission and the Department of Justice.

As proposed, the merger would create a DBS firm with at least 14.9 million
subscribers.

The new company plans to provide all local TV stations in 100 markets, 12
high-definition TV channels and nationwide two-way broadband service.

Because the deal would reduce the DBS market from two players to just one,
members of Congress are calling for strict conditions to protect consumers
without cable.

Although the National Association of Broadcasters is urging rejection of the
deal, the National Cable & Telecommunications Association has declined to
take a stand.

The FCC released a notice Dec. 21 seeking public comments on the DBS merger
by Feb. 4. Reply comments are due Feb. 25.

The DOJ, which conducts merger reviews in private, doesn't even disclose
whether mergers have been submitted for approval.

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