WASHINGTON — Federal antitrust officials have greenlit Vivendi Universal’s bid to buy up a 10% stake in EchoStar, giving the giant satcaster the needed cash infusion to merge with DirecTV.
The Federal Trade Commission let lapse an automatic 30-day review of Vivendi U’s proposal for a $1.5 billion stake in EchoStar, first revealed in December.
In exchange for taking the stake, Vivendi U’s extensive library will get prominent play on EchoStar’s Dish Network service. The Paris-based conglom plans on offering new pay-per-view and video-on-demand services.
Tougher sell on merger
While Vivendi U may have gotten easy clearance, EchoStar topper Charlie Ergen is experiencing a much tougher sell when it comes to the proposed merger with DirecTV. Antitrust officials at the Justice Dept. are well aware of complaints that the EchoStar/DirecTV union would virtually lock up the satcasting biz.
Capitol Hill lawmakers representing rural customers have been particularly vocal, saying the merger could create a perfect monopoly; Ergen has insisted he is willing to set up a national pricing plan for rural regions.
The FCC also must clear the EchoStar/DirecTV marriage. Earlier this week, satcaster Pegasus Communications asked the FCC to stop the clock on its review, saying that Vivendi U’s proposed stake in EchoStar poses anti-competitive concerns.
Pegasus, which now resells DirecTV services to customers in rural areas, says an alliance between content provider Universal and satcaster EchoStar would hurt smaller satcasting ventures such as itself.