FTC vet rips sat merger

Pitofsky claims deal would create 'virtual perfect monopoly'

WASHINGTON — A prominent Washington trustbuster who most recently headed up the Federal Trade Commission assailed the proposed EchoStar/DirecTV merger Tuesday, saying it would create a “virtual perfect monopoly” and that the deal should be soundly rejected.

Former FTC chair Robert Pitofsky was one of a chorus of voices protesting the proposed union during back-to-back hearings on Capitol Hill. The $26 billion merger would bring together the country’s two largest satellite broadcasters to form a company with a virtual lock on the bird market.

EchoStar chair-CEO Charlie Ergen repeatedly assured solons that the linkup would not create a monopoly at all since the playing field includes the cable biz. The enriched company would be in a better position to compete with cable congloms and, hence, benefit consumers.

Ergen testified at both hearings, before the powerful House Telecom Subcommittee and the equally key House Judiciary Committee.

Pitofsky and others, including the National Assn. of Broadcasters, don’t buy the argument that cable and direct satellite broadcast are interchangeable as cable isn’t offered in many rural areas.

“An analogy would be railroads and airlines, which both offer service from Washington to New York. You don’t let all the airlines merge just because there’s competition from railroads,” Pitofsky testified before the judiciary panel.

Rep. John Conyers Jr. (D-Mich.), ranking member on the judiciary panel, took Pitofsky somewhat to task, however, for representing himself as an antitrust authority when he works for a law firm that represents at least one small satcaster.

“You didn’t do much about Microsoft when you were at the FTC, and now you’ve come here as a trustbuster,” Conyers said.

The outspoken solon also quipped about whether News Corp.’s Rupert Murdoch was in the audience. Murdoch, in a rare blow, lost out on a bid for DirecTV. Conyers speculated about what would be more of an anti-competitive concern, an EchoStar/

DirecTV merger or a News Corp./DirecTV linkup.

“All I’m suggesting is that we’re between the devil and the deep blue sea,” Conyers said.

Tuesday’s hearings were the opening salvo in what’s sure to be a heated debate over the EchoStar/

DirecTV deal.

Late Monday, DirecTV filed formal merger application papers with the Federal Communications Commission. Along with the FCC, the deal also must be blessed by antitrust officials at the Justice Dept. Getting Justice approval will likely prove another tough battle.

Ergen told lawmakers that he supports offering a national pricing plan for rural customers who have no access to cable.

“We will do whatever the regulators would like us to do in this regard,” he said.

DirecTV chair-CEO Eddy Hartenstein, who sat next to Ergen during the telecom subcommittee hearing, said the merger is pro-, not anti-, competitive. If the companies aren’t allowed to walk down the aisle, cablers will become even more entrenched.

The National Assn. of Cable & Telecommunications took a middle-of-the-road stance Tuesday, saying it has taken no position regarding the satellite merger.

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