EchoStar turns up volume in fight with News Corp.

NEW YORK — EchoStar Communications Corp. chairman Charlie Ergen escalated his attack against his one-time sat-TV partner, News Corp., claiming Tuesday that the media giant backed out of its deal with EchoStar under pressure from the cable industry.

“They may have originally sent Dr. Kervorkian to the cable industry, but I think that the cable industry may have sent Dr. Kervorkian to make a house call back at News Corp. and I think that had the biggest impact,” Ergen said, referring to former News Corp. exec Preston Padden’s claim three months ago that the sat-TV venture was the equivalent of the suicide doctor for the cable industry. A News Corp. spokesman declined to comment.

Relations between News Corp. and EchoStar have deteriorated in the past two weeks, initially over a technology dispute but subsequently over News Corp.’s insistence that Ergen resign as CEO and cede operational control of the venture. On Friday, EchoStar sued News Corp. for breach of contract, claiming $5 billion in damages.

In a conference call with reporters, Ergen also said he was “naive” when he believed that News Corp. could be trusted to honor its agreement. But he also said the sat-TV operator, which needs to raise cash quickly to stay afloat, has already been approached by interested investors.

Among those said to have contacted Ergen is Time Warner vice chairman Ted Turner, whose antagonism toward Murdoch apparently prompted him to try to help EchoStar by offering a merger with the cablers’ sat-TV partner, Primestar. People close to Time Warner deny such an approach was made, however.

But Ergen told reporters on the call, “I have found that News Corp. has a few enemies out there and they figure they must like something about us.” He said it was “public knowledge” EchoStar had talked to Primestar about a possible alliance in the past, adding “Something like that may or may not make any sense.”

Ergen didn’t rule out a resumption of negotiations with Murdoch. He said Tuesday he would still do the deal if News Corp. “cured their breaches” (of contract), but he added that “given the chances they have had to cure their breach, realistically they don’t have any intention of doing that.”

Ergen’s biggest problem now is keeping EchoStar afloat. It warned in a Securities & Exchange Commission filing Monday that it would run out of cash by the end of June. But Ergen said Tuesday the company could adjust its business plan, cutting back on marketing spending, to conserve cash.

Even so, Ergen said EchoStar would need to “raise additional capital before the end of the year.”

Media Group Research analyst Curt Alexander said Ergen was being optimistic about his chances. Alexander said word of EchoStar’s financial situation would quickly spread around the consumer electronics industry, making it harder for the company to increase its distribution. EchoStar stock closed down $1.25 to $11.87 on Tuesday, while News Corp. stock fell 37¢ to $18.25.

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