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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."
I work at a large electronics retailer, and I've noticed many times that customers have difficulty distinguishing between the competing products, Dish and DirectTV. Prices and products are similar. On the other hand, I also see the two constantly respond to the other's promotions and price changes. Pricing of both products have reached the point where setup, installation, and the required hardware is essentially free. I'm sure that wouldn;t have been the case for long had the merger been apprived. It's also nice to see the likes of AT&T be forced to respond to the competetive pricing of the sat. providers. They're still expensive by comparison, but imagine how much worse it would be without these competitors.
I want the fire back.
How dare the government regulate where I get my media! What are they socialists???
/Satire, or, at least something like it.
They don't care about my rights as a consumer to have ALL my services charged on one convenient bill, all my services installed and fixed by one courteous, prompt repairman!
My life is so convenient when I can get all this stuff from one, homogenous provider! Maybe the government would like to provide all these services, oh, wait a minute, maybe it's not so socialist afterall.
See Richard Gere's Ass Zoo
tcd004
Opposing this merger on antitrust grounds is a no-brainer. It would mean the entire US would have but one satellite provider, which would be a total monopoly in those areas not served by cable. (Actually, there are ways for US residents to get Canadian satellite service from ExpressVu, like http://www.global-cm.net/).
However, this sudden affection from the Bush administration for strictly enforcing antitrust law is obvious horseshit. Dish won a bidding war for Direct by outbidding Rupert Murdoch's Fox conglomerate. Murdock, a renowned political conservative (he of Fox News, and the NY Post, among other things) figured (correctly, as it turns out) that the politicans his lobbyists bought over the years--primarily Republicans--could be counted upon to do his bidding. And so they have.
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.
Satellite hackers around the US and Canada are outraged at this move by the FCC. Rob Mishka, a long time connoisseur of free (read: stolen) satellite TV, was quoted as saying "We are just sick of having to deal with two different encryption keys every damn week. If they merged we would only have to deal with one!". Rob then spit out the tobacco he was chewing and went to work on the Trans-Am that has been raised on 8 bricks in his front yard since 1998.
Cable companies and phone companies are often allowed to have a monopoly in a certain area of a town - it's perfectly legal when the town enters a contract with the cable/phone company.
For instance, in my town of about 200,000 people, we have one cable company and one phone company - because we let them have a monopoly here in exchange for them laying down wire for the city (city owns it once they've laid it) and also making them push price changes, policy changes, important things like that before our city government - or risk losing their monopoly.
I forget the name of the type of monopoly this is, but it's perfectly legal and (arguably) better for the population of a smaller city to have a company come in and wire the entire city just for being allowed a monopoly AND for the population to have relative control over the price and content offered.
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. )
---If you can't trust a nerd, who can you trust?
Most mergers don't do much for the shareholders. In fact, most M&A activity is counterproductive. You'd think otherwise, but, in fact, making the company formed by a merger work properly is hard.
The biggest point is that in most areas (in temrs of geography) of the country, this reduces multi-channel tv systems from two to one company, and it cities with cable, from 3 to 2.
When the merger first came out it didnt seem so bad, because both satellite companies had stagnated for a while in terms of adding content and local markets (aka local-in-local, or LiL). But in the past year, three spot-beam satellites have become operational, and one more is scheduled to come online. Both Dish network and DirecTV have (or will have soon) the capability to serve the top 100 or so television markets (there are around 220 DMA, or designated viewing areas). Dish Network actually has the capability to serve all 220 DMAs using other oribtal locations for satellites that can see half the country (at 61.5 degrees Wests and 148 degrees West, where as the current satellites that can see all of the CONtinental US are located at 101, 110, and 119 degrees west, aka the three CONUS slots).
The only thing that the merger would have helped is HDTV offerings. Right now, each provider has 4-5 HD channels. As more come online, there will be a bandwidth crunch (since each HD channel will take up the space of 4-6 regular channels). Maybe at the maximum, there will be room for about 20 HD channels for each provider, but there is not enough bandwidth to provide more than that.
Also, Charlie Ergan (the CEO of Echostar, the owner of Dish Network), has done a number of things to piss off the FCC (like challenging the law that says if a provider carries any number of local channels from a city, it must carry all of the channels for that city, regardless of how popular the station is). After he lost the appeal for this law, he tried to do an end-run around the law, and put the most popular networks (the big four plus WB and UPN and in some cases PBS) on the main satellites, and require users to put up a second dish for the smaller stations. The FCC got pissed and told Echostar to do a number of remedies to fix the situation. They have come into compliance of the recomendations, but its still very iffy.
All and all, its a good thing this merger was rejected. The downside is that now Rupert Murdoch will now be the likely owner for DirecTV. Which is better, the devil you know, or the devil you dont?
The Doormat
If you're not outraged, then you're not paying attention.