FCC Set to Sink EchoStar – DirecTV Merger

07 October 2002

The long-awaited $18 billion (€18.40bn; £11.51bn) purchase by Charlie Ergen’s EchoStar Communications of Hughes Electronics, parent of satellite rival DirecTV, is set to founder on the reef of intervention by the Federal Communications Commission – perhaps as early as today (Monday), according to insiders.

In a TV interview Friday, FCC chairman Michael Powell said the commission’s decision was “imminent”, just “days away”; although he refused to be drawn on the outcome.

But those close to the discussions say that unless both companies make massive eleventh-hour concessions, the FCC is likely to block the sale later today. Chairman Powell is said to be against the takeover, as are two other of the four commissioners.

It thought they will vote to accept the fortnight-old recommendation of FCC executives to reject the merger on grounds that it would to all intents create a virtual US domestic satellite broadcasting monopoly.

Both companies are desperate to appear committed to the deal as under its terms, one would be required to pay massive penalties to the other if it “failed to use its best efforts” to secure federal approval. Hughes “entire focus” is on ensuring the merger’s completion, said a spokesperson this weekend.

Meantime, a smile is said to be cracking the dour features of global media mogul Rupert Murdoch, a former contender for the hand of DirecTV, who claims to oppose the merger because of his rooted moral objection to monopolies.

Data sourced from: Yahoo! Finance; additional content by WARC staff