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???

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. )

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.

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.