Hughes ready to walk away from sat union

WASHINGTON — Signaling the end of its merger pact with EchoStar for the first time, Hughes Electronics said Wednesday it is not willing to fight for the deal and wait while the feds reconsider the doomed bethrothal of satcasters DirecTV and EchoStar.

This means that Hughes, parent company of DirecTV, can walk away next month and likely collect a $600 million kill fee from EchoStar.

“General Motors and Hughes are not waiving any of the termination provisions in the merger agreement,” a Hughes spokesman said.

EchoStar had hoped that Hughes would extend two key deadlines written into the contract, at least until the Federal Communications Commission finished reviewing an amended merger application jointly submitted with Hughes on Thanksgiving Eve.

One deadline says that Hughes can walk away if the FCC hasn’t approved the merger union by Jan. 6, or if the merger isn’t consummated by Jan. 23.

In their amended application to the FCC, the parties stressed the importance of swift action.

Time’s running out

It became clear by early Wednesday afternoon that the FCC had no intention of expediting matters: The agency issued a notice stating that the public would have until Jan. 3 to comment on the amended application; reply papers would be due Jan. 21.

Such a schedule makes it virtually impossible that the FCC will rule by Jan. 21. Also, there isn’t much of a chance that the FCC would clear the revised merger, which proposes to give upstart satcaster Cablevision coveted satellite spectrum.

Despite Hughes’ reluctance, an EchoStar spokesman said the company is willing to negotiate with Hughes and extend the termination deadlines to make allowances for the FCC comment period.

Throughout the merger review process and until Wednesday, EchoStar and Hughes had kept a united front in commenting to the press, even after the FCC and Justice Dept. rejected the deal in October.

Antitrust toppers at Justice said the merger would create a monopoly in rural areas with no access to cable. The FCC said the merger would hurt the public interest by concentrating too much market power in one company.

Patiently waiting in the wings is News Corp.’s Rupert Murdoch, who lost out on his bid for DirecTV to EchoStar’s Charlie Ergen. There is widespread speculation that Murdoch will make another go at DirecTV.

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