For all the heat the EchoStar/DirecTV merger is getting, one would think it’s the biggest and baddest media union of all time.
AOL Time Warner toppers never caught the kind of grief EchoStar’s Charlie Ergen did last week from the Senate Judiciary Subcommittee on Antitrust.
Maybe it’s because the EchoStar/DirecTV marriage is easier to understand. Antitrust law says it poses a serious problem for the country’s two largest satcasters to merge, since that will leave rural customers, who have no access to cable, with one pay TV provider choice — what some are calling a monopoly.
“On the surface, it’s about as illegal as a merger can be,” former Federal Trade Commission topper Robert Pitofsky told solons on the Senate’s antitrust subcommittee.
Ergen, sitting beside Pitofsky during the March 6 hearing, reiterated that the satcasting biz must be considered a competitor to cable, not as a stand-alone sector.
In that case, there’s nothing monopolistic at all about the deal, Ergen says. In fact, it’s actually good for the American consumer, since it infuses the satcasting biz with enough strength and power to stand up to the giant cable congloms.
Ergen’s often combative business style may be part of the reason why so many are opposing his bid so vehemently. He’s long been at loggerheads with broadcasters, who don’t feel he’s played fair when it comes to carrying local signals.
During the Senate hearing, Ergen and DirecTV topper Eddy Hartenstein said they can comply with antitrust laws by promising certain legally binding concessions in exchange for merger approval from the FCC and the Dept. of Justice. They include the following:
- A national pricing plan for rural areas
- Carriage of local broadcast signals in all of the country’s 210 TV markets within two years of the merger’s closing
- Plenty of high-definition programming and interactive services, such as video-on-demand
- Intensive broadband deployment.
“Sometimes remedies are needed,” Ergen said.
But Antitrust Subcommittee chair Sen. Herb Kohl (D-Wis.) questioned the wisdom of a merger that would certainly require the government to play full-time monitor once the deal closed to make sure EchoStar/DirecTV doesn’t stray outside the law.
Solons said this goes against the prevailing sentiment, which is to get Washington out of the marketplace.
“It seems to me there are enormous barriers you have to surmount to get this approved,” Kohl said. “At this point, I don’t think the merger would be great for the people of America.”
Missouri Attorney General Jay Nixon, also testifying against the satcasting combo, informed the senators that a group of state attorneys general is still considering bringing a lawsuit to block the deal.
“Mostly, it seems to me you have a legal problem,” Sen. Mike DeWine (R-Ohio) finally said to Ergen. “I know you have lawyers, but are they that good?”
As Ergen and Hartenstein continued to make the headlines, there was barely a peep as Comcast filed papers with the FCC on March 1 seeking approval to merge with AT&T’s sprawling cable unit.
The cable deal should certainly give pause, considering that Comcast is the country’s third largest cabler and AT&T’s unit No. 1.