Dolan’s DBS platform a silver bullet

Cablevision chief maneuvers as Ergen endeavors

With Charlie Ergen of EchoStar fighting the corporate battle of his life to save the merger with DirectTV from regulatory rejection, cable godfather Charles Dolan of Cablevision may yet get to play white knight.

Ergen is mounting a last-gasp effort to persuade D.C. cartel cops that his proposed merger with DirecTV would not undermine consumer choice nor create a monopoly in rural areas with no access to cable.

Meanwhile, Cablevision’s plans to build an alternative DBS platform for the U.S. market could prove to be Ergen’s silver bullet. And Dolan seems to be pulling out all the stops to position his company as the answer to Echostar’s antitrust woes.

The spectacle further makes the showdown in the nation’s capital over EchoStar’s efforts one of the more bizarre chapters in merger review history. Not even the review of the AOL/Time Warner merger had so many last-minute twists and turns and makes that one look like child’s play.

Tuesday, Ergen continued his effort in D.C. By day’s end, he had held face-to-face meetings with FCC commissioners Kathleen Abernathy and Michael Copps.

Insiders at the FCC were peeved on Monday by Ergen’s request that the reg agency hold off rendering a final decision until negotiations with the DOJ are completed. The satcasting mogul explained that he’s set to show up again at the DOJ later this month, where he’s likely to discuss various concessions, including giving up spectrum to a smaller rival.

Ergen also wants the FCC to hold a public hearing on the merits of the union. The FCC did hold a hearing during the AOL TW merger, but it came much earlier in the process and was instigated by the FCC, not the other way around.

Why did he wait?

Government insiders questioned why Ergen waited so long in the game to ask for the hearing. The reg agency is under no obligation to heed either of Ergen’s requests.

FCC spokesman David Fiske wouldn’t comment on Ergen’s most recent communique nor on Ergen’s meetings with Copps and Abernathy.

Rumors abound that both the U.S. Dept. of Justice and the Federal Communications Commission are posed to reject the merger on the grounds that it would wipe out competition in the satcasting biz.

Ergen has insisted that satcasting is a rival of cable. In rural areas where there is no cable, he would offer a national pricing plan.

The FCC is skedded to release its ruling within 25 days, with the DOJ traditionally issuing its decision around the same time as the FCC.

Waiting in the wings

All the while, News Corp.’s Rupert Murdoch waits in the wings, hoping to get another chance to buy up DirecTV after losing out last year to Ergen.

Despite Murdoch’s public laissez faire attitude about DirecTV, News Corp. over the last year has retained a handful of outside lobbyists in Washington in an effort to undermine EchoStar’s effort.

And if reports are true that three out of the four FCC commissioners will vote to reject the deal, those lobby efforts may be paying off. But the wily Ergen isn’t giving up yet — nor is Cablevision.

Industryites say Ergen has softened his earlier resistance and is proposing various concessions that would ease the DOJ’s antitrust concerns.

It’s here that Dolan enters the scene. Dolan is lobbying the government to secure 17 slots from EchoStar, which it describes as “peripheral” and is believed to have secured a financial partner to launch its Rainbow DBS project, despite protestations by shareholders that the project is a white elephant.

Thus far, EchoStar hasn’t been keen on Cablevision’s plan, saying a merged EchoStar/DirecTV would need every inch of spectrum it has to keep its promise to provide local programming in all 210 TV markets.

Strategic partner

The cash-strapped Cablevision claims it will have a financial and strategic partner to cover the hefty cost of the project, while additional funds should come from the expected sale of its Bravo channel to NBC.

Despite shareholder skepticism about Dolan’s expensive wild-card satellite wager, Cablevision is evidently pulling out all the stops to be EchoStar’s DBS savior.

Cablevision, which says it will launch a state-of-the-art spot-beam satellite next March, hopes to offer its Rainbow DBS platform to all 210 U.S. markets, featuring local programming and advanced set-top digital boxes that could support high definition broadcasts and high-speed Internet.

Cablevision has argued to the FCC that its entry into the market — predicated on getting EchoStar’s slots — would ensure not only continued satellite competition in the U.S. but would also force its rivals to upgrade their own “antiquated” boxes, currently used in 18 million to 20 million homes.

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