Senate cautions DOJ on satellite merger.(Brief Article)

The Antitrust Division needs to think long and hard before approving the Echostar/DirectTV satellite merger that would reduce the number of competitors to just one in rural areas that are not served by cable TV companies, Senate Antitrust Subcommittee Chairman Herb Kohl (D-Wisc.) and Mike DeWine (D-Ohio) informed Assistant Attorney General for Antitrust Charles James in a June 27 letter. The Subcommittee held a hearing on the merger on March 6. [FTC: WATCH No. 584, March 11]

At the hearing, both merging parties proposed several steps to address problems posed by the merger, but the Senate is not convinced they will suffice.

One proposal was for a uniform national pricing plan, but would limit the combined companies' ability to respond to cable price reductions in specific local markets i.e., urban price competition could suffer).

Echostar and DirectTV argue that the combined company could provide local broadcast service to consumers in all 210-television markets across the nation each apparently already has the technical ability and spectrum to do that independently. Some congressmen were incredulous because earlier the parties would only promise to enter 100 local markets, but when high-level opposition to the merger became apparent, they suddenly revised their best estimates and said they could enter all 210 local markets.

The biggest problem is that the two proposed solutions to merger problems would require a legally binding ...