DOJ Blocks Satellite TV Merger

EyesWideOpen writes "The Justice Department filed a lawsuit to block a merger between EchoStar Communications and Hughes Electronics that would have created the nation's largest pay-television service, stating that 'This merger would give EchoStar control of the skies for the provision of video programming by satellite, leaving customers to suffer from the resulting reduction of competition'. The FCC had already voted unanimously to oppose the merger because it would create a monopoly that would have 'adverse' effects for consumers."

Comments

What?

[Quasar1999]

Adverse effects??? Someone care to tell me where the hell these people were when Cable companies took root in my town??? Oh, did I say companies? I meant company... Adverse effects of that don't seem to bother these idiots... so much for affordable broadband via satellite throughout the country... so much for local tv service in real digital quality (not the digital BS cable has)... Ick... At first glance this seems like a great victory against monopolies... but what does it really mean???

Re:What?

[Student_Tech]

There are alternatives for digital satallite tv that aren't DirectTV/Dish. Example is the 4DTV, uses the C-Band equipment and a big dish. Its digital, its tv, its over satellite.
Quote from article:

James said the deal would create a monopoly in tens of millions of rural homes where cable television doesn't reach, and reduce choices in other areas. Twenty-three states, the District of Columbia and Puerto Rico joined in the lawsuit.

They need to realize that the small 18" dish no-moving, mono-satallite (yes I do realize some are larger and do receive from 2 or 3 at once) dishes would be all under one company, but an option does exust for the people who have the big dishes, which likely would include "rural" customers that don't get cable.

<RANT>
I also know that cable in some areas is to the point where they are ripping you off. My family swapped to DirecTV (choice because of what they offered channel wise that I got from their website, and the fact we could go to RadioShack and get all the stuff), because the local cable, after taxes, was going up to $40/month for the expanded service (no HBO, showtime, cinemax, encore, ect in that. News, General Family Entertainment, local channels, things like that). The satallite ended up being $32/month. We got one of the amplified antennas on the dish and we got the local channels. We don't get Northwest Cable News which we wish we did, but that wasn't even in the cable basic package at $25 a month. In fact the basic package included 24 channels, 2 were shopping, the ABC/NBC/CBS/PBS affilites (WB was in the expaned, as was UPN), community channels, CSPAN[1-3].
</RANT>

Ok, now that my rant about my local cable system is gouging me is over, let me just say that there are options besides DirecTV and Dish for getting digital satallite TV, but if one focuses on urban areas they may be the only choices.

Re:What?

[Jayjay75]

Cable, telephone, and Internet are another story entirely, though. There's absolutely NO REASON that a second cable or local telco company couldn't be profictable in many situations, but they're prohibited from running a wire to your house in the name of protecting competition.


Local governments grant regulated-monopoly status to one cable company, one telco, etc. simply to avoid having dozens of competing companies string wires all over the place creating an eyesore, or blocking traffic by constantly digging up roads to bury their own cables.

Seriously

[El Pollo Loco]

I agree. Where I live, it's AT&T for cable, and that's all. Up until recently, it was USWEST/QWEST for phone service. I guess the satellite companys just didn't bribe enough politicans.

These so-called effects

[molrak]

Adverse effects like small markets being able to get their local 3-5 stations over satellite? Adverse effects like a somewhat faster satellite internet connection? Adverse effects like nation-wide pricing? Silly me, I must need to check the definition of adverse.

What's the hidden agenda here?

[loggia]

Everything the FCC has been doing under Michael Powell is pro-merger, pro-consolidation, anti-consumer.

So, I say, what's the frequency, Michael? What's the hidden agenda here - because there obviously must be one.

Sometimes Gov't works

[ZeroLogic]

Could this be an example of the government doing something right? And maybe, just maybe protecting the rights of its citizens?

Re:Sometimes Gov't works

[aanantha]

Could this be an example of the government doing something right? And maybe, just maybe protecting the rights of its citizens?

No such luck. This is an example of the administration trying to protect their cronies in the cable industry.

Individually, Dish Networks and DirectTV are no threat to the local cable companies. People who live in apartment complexes are rarely able to install satellite dishes. If your patio doesn't point the right way or you don't have a clear 45 degree line of site over any trees, you're screwed. A few complexes will let you install a dish on the roof if you're on the top floor. But they don't have to so they usually will not permit it. Many windows are opaque to satellite signals, so simply finding a window pointing in the right direction is not necessarily enough. I have to open a bedroom window to use my dish.

And even if you can get a dish installed, you probably won't get all your local networks. Although there will always be one station broadcast for every network from your satellite, you can't get access to any station that's not in your "broadcast area". Dish and DirecTV would probably like to sell you a package that gives you access to a replacement station in a different region, but they're not allowed to. The law prohibits it. Years ago, the cable companies lobbied the government to put that law in place to protect themselves from satellite competitors. How many people will subscribe to satellite TV when they'd be missing one or two of ABC, NBC, CBS, FOX, UPN, and WB?

Good Move

[Evil Adrian]

A good move, especially considering that the barrier for entry to that industry is so insanely high that only Microsoft would dare attempt it.

With that said, how much do you want to bet that Microsoft tries to buy one of them?

It's all a sham.

[cryptochrome]

I'm sure it seems like this is a great thing, having prevented a satellite TV monopoly, but look again: unlike cable, which is limited only by the expense of laying and lighting cable, satellite has severe constraints on expansion of their service. It's really expensive (and risky) to launch a satellite, there are limited orbits for them to use, and limited frequencies for them to use. A merger would have meant that the two companies could have pooled their resources and offered local channels throughout the country. Instead there's a huge duplication of effort, neither of which is adequate. So instead of less populous areas being subject to a monopoly (whose prices could have been controlled by other means, namely a single nationwide pricing scheme), they're subject to NO decent service. Cable, meanwhile, enjoys an effective monopoly in all those areas, at whatever price it feels like, assuming it feels like serving them at all.

(BTW: another brain-dead, protectionist aspect of the legalities surrounding satellite TV - unless you're in a particular local broadcast market, you're not allowed to receive channels in it - even if the equivalent channel doesn't exist in your area, or no local service is available for your area! I.E. I can't get UPN nor WB via satellite, despite the fact that they are actually broadcasting it off the same bird I would receive from. )

I hate cable

[ouija147]

Before I got DirecTV our cable bill went up every year like clock work.

This year DirecTV added channels AND dropped my rates.

DirecTV and DishNetwork compete with the cable companies more than they compete with each other. This is beacuse they don't have the bandwidth to serve local channels to all the DMAs (designated market areas). They have to make themselves extremely atractive to the potential cable refugees--the new sat customer has to install an antenna to get local service or pay the cable company for "lifeline" service.

The cable companies went to court and got the FCC to force the Sats to follow the same must carry provisions that the cables follow. That is if they carry one local channel they have to add ALL the local channels. That amounted to about 1600 channels nationwide. That put an end to my hope of getting local channels from the Sats. They just can't individually carry all of these channels.

I live in Little Rock AR and as the 56th (I think) DMA in the nation the sats were about to add LR to the system when cable companies got the lawyers involved.

If the merger had been approved, I would have gotten my local channels from DirecTV, as the merged company would have been called. The combination of the two would have the bandwidth to carry ALL THE DMAs.

Screwed by the cable company and I don't even have cable anymore.

Re:I hate cable

[Cratylus]

The interesting thing to note here was that most Dish customers were looking forward to the merger, while most DirecTV customers were opposed to it. I think it's because the Dish customers were hoping to get better hardware, more programming options (NFL Sunday Ticket), etc. The DirecTV customers had nothing to gain, unless you lived in a really small market and believed Charlie's promises of more local into local coverage.

If DirecTV has the locals you want, why don't you just switch?

Please think about your "politics"

[abulafia]

When the government grants a certain business a regional territory, franchise, subsidy, or, protection, competition is legally prevented by threat of force.

Violators of the government's will are arrested at gun point [...] When the government allows companies to merge into huge monopolies, they are only laying the foundations for socialism -- and that's the last thing we ever want in America.

What you are describing is termed Fascism, not socialism. You might profit by learning a bit more about political science.

Without free markets and cutthroat competition, our economy will become stagnant and weak and eventually fall apart due to corruption and incompetence, like in the former Soviet Union and soon to be in socialist western Europe.

I think a little less Usenet and a little more Friedman and Hayek would allow you to make the case you want to make a bit more clearly.

-j

Remember when,.....

[Anonymous Coward]

Remember when having cable tv meant you had pretty much commericial free tv? The big 3 had to
have commericials to pay for the shows. Cable TV is something you HAVE to pay for. Now there are
as many or more commericials on CABLE TV. So I not only pay the %$#^@'s for the cable, but also
have to endure #$(#^(# commericals.

I would let them have their monopoly if they would promise to get rid of the commericials.

Telepoly

[Anonymous Coward]

Where I am there is one phone company that owns all the lines..then the other companies lease these lines for things like DSL, phone, and dial up stuff. The thing is, the company that owns all the lines put a 3GB restriction on downloads, charge high prices, and only give little amounts of bandwidth to the other companies.

This is why i see preventing the merger of these two companies as a good thing...if there is competition then they will have to fight agianst eachother, which will lead to lower prices and stuff like that.

Re:Erf? Why bad?

[RobotRunAmok]

Surely a merger is good for consumers?

Exactly the opposite, actually.

A merger does not mean that every channel on each existing service automatically gets pulled on to the new service

Let's take SlashDotters' favorite content niche, Porn, as an example. (L33T HAxx0Rs and other fourteen-year-olds, please note the correct spelling).

Let's say the New Merged Company (NewCo) decides they want to charge a higher premium for Porn. Not pay the content provider (e.g., Playboy) any more, just charge a higher premium. Some subscribers pay it happily, others grudgingly, others drop the channel(s). There is little either the content owner (Playboy) or the consumer can do. With only one distributor -- one trucking company driving the food from the farm into the local grocery store -- the distributor makes the rules and sets the margins.

Let's say you are a struggling Porn network and you want to get distribution. If NewCo decides it has enough Porn channels at the moment (with Playboy's 4 or 5 or whatever it is), you're done. At the moment, with two sources of satellite distribution, the newer smaller nets are more likely to get a niche, as each distributor uses it as leverage against their compeitor ("Get a Subscribution to Dish, we have the CowboyNeal Porn Channel, the other guys don't!")

If the Porn Channel is entenched with NewCo, and its CEO plays golf with NewCo's EVP Programming every Sunday, it's pretty much on a path to squeezing out more copycat Porn channels to the consumers while figuring out exactly how frequently it can raise rates. Why not? No competition will be introduced. In fact, the distributor can quite handily use its position as the single distributor to dictate exactly what type of new channels should be introduced, and, more disturbingly, how the content on existing channels should be modified.

Worst of all, yet not unimaginable (especially given our niche example) NewCo might (albeit foolishly) even decide they did not want to carry Porn.

As an aside, I am fascinated to see so much support for this merger here on SlashDot. It is getting tougher and tougher to figure this place out. Not that that is a bad thing, of course. Makes for some interesting discussions.

Re:Questionable merger details

[Anonymous Coward]

Do moderators read the comments or just look for big words? There has been no explosion of merger laws in recent years. The Sherman Act dates back to 1890. There isn't such a thing as "merger laws." They are antitrust laws.