Ergenomics the new math on Capitol Hill

Tauzin keeping 'open mind' about merger, pricing system key

WASHINGTON — A powerful Capitol Hill politico on Tuesday gave EchoStar CEO Charlie Ergen some advice Tuesday: Come up with a national pricing system for rural areas before seeking approval to create what would be a virtual monopoly in the satellite TV market.

Rep. W.J. “Billy” Tauzin (R-La.) emerged from an hourlong meeting with Ergen and DirecTV chair-CEO Eddy Hartenstein to say that he’s keeping an “open mind” about the proposed merger of the country’s two largest satellite TV providers. Tauzin’s support is key, as he heads up the House Commerce Committee, which has jurisdiction over the landmark deal.

Ergen and Hartenstein wasted no time in rushing to Washington to rally support for the marriage, which is expected to encounter stiff antitrust concerns. The corporate duo also paid a visit to the Federal Communications Commission, meeting with top-level staffers.

As well as needing the blessing of the FCC, the merger will be reviewed by antitrust officials, most likely at the Justice Department.

Tauzin, like many other Capitol Hill solons, remains concerned that the marriage of EchoStar and DirecTV –with a combined roll of 16.7 million subscribers — could hurt customers in rural areas.

“If this merger is eventually approved — and that’s a big if — we would like to see it conditioned on some type of uniform, nationwide pricing system guaranteeing that people in rural, underserved areas get the same advantage which benefits customers with access to cable,” Johnson said.

Otherwise, and without getting specific, Ergen and Hartenstein “made their case for the merger,” Johnson said. At the same time, Tauzin made no promises.

Ergen, in press briefings held over the past few days, expressed confidence that he can scale the regulatory hurdles.

Ergen has said he’s prepared to address the delicate question of rural customers, keenly aware that he must soothe any opposition emanating from Washington.

A top selling point for the EchoStar-DirecTV marriage is that satellite TV would then provide greater competition to cable.

“In the end, we’re not as concerned about the quantity of competitors as we are about the quality of competitors,” Johnson said. “The realities of the 21st century marketplace dictate that companies need tremendous resources if they are going to compete.”

In a down market Tuesday, EchoStar and Hughes Electronics (which houses DirecTV) shares each dropped 3.9% to $23.14 and $13.80 respectively.

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