Antitrust Report Favours NewsCorp Bid for DirecTV

10 August 2001

NewsCorp’s efforts to buy DirecTV, America’s biggest satellite television broadcaster, received a boost with the release of an antitrust report claiming the rival takeover proposal from EchoStar Communications could harm some consumers if accepted.

NewsCorp has been trying for months to land the prize of DirecTV, with number two satellite firm EchoStar desperate to stop it. Earlier this week, EchoStar launched an unsolicited $30.4 billion bid for Hughes Electronics, the General Motors unit that houses DirecTV, after an earlier offer was rejected [WAMN: 20-Jul-01; 06-Aug-01].

However, a study by Albert Foer, president of the American Antitrust Institute, argues that a merger between DirecTV and EchoStar’s DISH network would put “between 3.4% and 19% of the population under monopoly conditions.” Such people, mostly in rural areas, would have access to only one “provider of TV multichannel programming.”

Foer also supports NewsCorp’s argument that the existence of two large satellite broadcasters would “likely pull down [cable TV] prices further than one satellite company alone.” He added that, in a sector “where future technological improvement seems likely, there is probably an enormous dynamic efficiency in keeping the satellite companies pitted against each other.”

The report follows a study by Donald Russell, an antitrust official under the Clinton administration, who came out in favour of an EchoStar/Hughes merger, arguing that a single satellite giant could help consumers by reducing cable prices.

The saga continues.

News source: Wall Street Journal