Justice Department to file a lawsuit to block satellite TV merger

<br>WASHINGTON (AP) _ The Justice Department will file a lawsuit Thursday to block a merger between EchoStar Communications Corp. and Hughes Electronics Corp. that would have created the nation's largest

Thursday, October 31st 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ The Justice Department will file a lawsuit Thursday to block a merger between EchoStar Communications Corp. and Hughes Electronics Corp. that would have created the nation's largest pay-television service, according to a law enforcement official.

The department's opposition comes despite concessions EchoStar offered last week to bolster a rival company and avoid concerns about a potential monopoly.

The lawsuit is expected to be filed Thursday afternoon on behalf of the Justice Department, 23 states, the District of Columbia and Puerto Rico, arguing the deal would reduce competition and hurt subscribers, according to Missouri Attorney General Jay Nixon.

``Elimination of competition hurts consumers,'' Nixon said in a statement. ``When there is an absence of competition, consumers could have fewer programming choices and pay more _ for satellite service, for equipment and for installation.''

The Federal Communications Commission had already voted unanimously to oppose the $22.6 billion merger, saying it would create a monopoly that would have ``staggering'' adverse effects for consumers. The Justice Department's review was focusing on potential antitrust implications.

Officials from EchoStar met with Justice Department attorneys for several hours last Friday to discuss proposals to save the foundering deal and said they remained committed to seeing the deal through.

Echostar, based in Littleton, Colo., runs Dish Network, while El Segundo, Calif.-based Hughes operates DirecTV. Together, they serve about 18 million subscribers and would be the largest pay-television service, although they would be overtaken if a merger of cable TV giants AT&T and Comcast is approved.

Echostar and Hughes argued the merger will allow them to compete with cable giants.

Opponents of the deal, including the FCC, said the merger would reduce the consumer's options for multi-channel television, and would create a monopoly in rural areas where cable television is not available to as many as 22 million homes.

To address those complaints, EchoStar had agreed to sell or lease its own satellites to Cablevision Systems Corp., based in Bethpage, N.Y. That concession would would have given Cablevision the capacity to deliver programs nationwide.

Today, Cablevision delivers cable programs to 3 million customers in the New York metropolitan area.

Once the Justice Department files its lawsuit, EchoStar and Hughes can still argue that the deal should go forward.

Analysts have said that, if the EchoStar deal falls through, it could clear the way for Rupert Murdoch's NewsCorp. to make a bid to buy Hughes from its parent company, General Motors.