Path to DirecTV union tangled
Last year, AOL and Time Warner had to tackle a tough and prolonged review, with federal regulators exacting a few concessions, but there was never any doubt that the merger would be cleared. Not long before, Viacom won approval to buy up CBS.
This time though, EchoStar topper Charlie Ergen is not finding the approval process a cakewalk.
There are formidable forces working against him, including the National Assn. of Broadcasters, key Capitol Hill solons and the National Rural Telecommunications Cooperative.
Last week, opponents filed formal papers with the FCC outlining their objections, the chief one being that the merger would create a perfect monopoly in rural markets where there is no access to cable.
As if these objections aren' t enough, the EchoStar/DirecTV deal is being poked and tested by antitrust staffers at the Dept. of Justice. The DOJ's review is sure to question whether the merger would create a monopolistic platform with total say and control.
Late last month, Sen. Orrin Hatch (R-Utah) dispatched a letter to Attorney General John Ashcroft strongly hinting that he is out-and-out against the merger. Hatch is the GOP's ranking member on the Senate Judiciary Committee.
"I have long been concerned about competition in the digital entertainment and information services, and the harm that can befall consumers when gatekeepers limit consumer choices by limiting access in anticompetitive ways. This concern has arisen in a number of contexts recently, from the Microsoft case to the AOL Time Warner merger, and appears to be presented squarely by this merger," Hatch said.
Finally, News Corp. topper Rupert Murdoch, who was spurned in his own bid to merge with DirecTV, has not totally relinquished the field. It would be too crass, too obvious, to file public papers with the FCC. Instead, Murdoch's News Corp. is expected to make a straight beeline for the Justice Dept., arguing from a programmer's perspective.
It's entirely possible that the Walt Disney Co. is weighing in with the DOJ as well. The Mouse is presently in a legal spat with EchoStar's Dish TV network over carriage of the ABC Family channel, previously Fox Family. Dish TV says the change in ownership allows it to renegotiate carriage with the Mouse. (Last year, Disney fought the AOL TW merger.)
How seriously Washington takes the word of these antagonists in considering the merger is an open question. But if history -- very recent history -- is any indication, Ergen will, despite the objectors, eventually get his way.
He insists that the merger is good for a go, and that in no way does it constitute a monopoly. Satcasting can't be considered as a stand-alone biz, but rather, as a competitor to cable, Ergen argues. For those rural areas of the country where there is indeed no cable, Ergen says he is ready to establish a national pricing plan.
