WASHINGTON — A Senate panel Wednesday threw some cold water on the betrothal of satellite giants EchoStar and DirecTV.
Several solons made the point that addressing the monopoly concerns inherent in wedding the nation’s largest satcasters — and monitoring compliance — would require a major undertaking for government regulators. And even if regulators were convinced consumers’ interests could be protected under such a plan, there is little interest in D.C. for expanding the feds’ role in the marketplace, they said.
The continuing and often fierce resistance to the $26 billion merger on Capitol Hill and elsewhere is catching up with EchoStar’s Charlie Ergen, who was unusually subdued during testimony before the Judiciary Subcommittee on Antitrust. Session marked the first time that Senate solons have weighed in on the marriage of the country’s two largest satcasters.
“It seems to me there are enormous barriers you have to surmount to get this approved,” said subcommittee chair Sen. Herb Kohl (D-Wisc.). “At this point, I don’t think the merger would be great for the American people.”
Ergen and DirecTV topper Eddy Hartenstein said they were willing to sign off on a host of legally binding conditions in exchange for merger approval, including a national pricing plan for rural areas, a commitment to carry local broadcast signals in all of the country’s 210 television markets, a commitment to airing high-definition programming and development of interactive services.
“Sometimes, remedies are needed,” said Ergen, insisting that the merger holds enormous benefit for the consumer. Ergen has argued throughout the merger proceedings that a combined EchoStar/DirecTV should be viewed not as a monopoly in the DBS market but rather as a more viable competitor to the firmly entrenched cable TV industry.
The FCC and the Dept. of Justice must both sign off on the deal, with either party able to exact certain concessions.
Waste of resources
But Kohl and other pols — from both sides of the aisle — questioned whether it’s wise for the government to spend the time and resources drawing up such an elaborate consent decree, and then monitor the situation to make sure the decree is honored.
“It would be a major departure from everything we’ve done in antitrust law for the past 100 years,” former FTC topper Robert Pitofsky testified.
Pitofsky, who served in the Clinton administration, said the EchoStar/DirecTV combo would be a “perfect monopoly” in rural areas where there is no access to cable, thus in conflict with the nation’s antitrust laws.
“Mostly, it seems you have a legal problem,” Sen. Mike DeWine (R-Ohio) said to Ergen and Hartenstein. “I know you have lawyers, but are they that good?”
Also testifying in opposition was Missouri Attorney General Jay Nixon, who, along with other state attorneys general, may bring a lawsuit blocking the merger.
“I wouldn’t come here if we weren’t seriously considering a claim,” Nixon told reporters.
Nixon said the merger could ultimately benefit consumers but that the risk of EchoStar/DirecTV breaking promises may be too great to take any chances.
“I’m sorry that Mr. Nixon has pre-determined this merger,” Ergen said.
Ergen wasn’t without allies at the Senate hearing.
Consumers Union co-director Gene Kimmelman told solons the deal is crucial if the satcasting biz has any hope of remaining a viable competitor to cable. The cable playing field, already ruled by select giants, will narrow all the more in light of the proposed Comcast/AT&T Broadband merger.
“It is important to understand that, while antitrust is an excellent tool to prevent monopolization or substantial dilution of competition, it may do nothing to create new competition or explode existing monopolies,” Kimmelman said.
Sen. Patrick Leahy (D-Vt.) said he believes the merger could go a long way toward ending the digital divide, since the satcasting conglom would be able to offer high-speed Internet service on a widespread basis.
Ultimately, Capitol Hill has no direct say-so in what course the FCC or DOJ takes, though it can apply behind-the-scenes pressure and use its bully pulpit.
NAB opposes wedding
The antitrust subcommittee is generally viewed as a close friend of the National Assn. of Broadcasters, which is opposing the EchoStar/DirecTV deal. NAB prexy-CEO Eddie Fritts was among those testifying Wednesday.
In recent weeks, Ergen and Hartenstein have sweetened the pot, announcing the plan to carry broadcast signals in all markets.
The NAB, however, has still not softened its objections to the merger. Broadcasters have long been at odds with the satcasting biz over the carriage issue and thus far have won a court battle to uphold a new law requiring satcasters to carry all local signals or none.
Ergen told reporters following Wednesday’s hearing that he intends to appeal the latest appellate court ruling to the Supreme Court on principle, saying the none-or-all rule is unconstitutional.