The proposed merger between EchoStar Communications Corp. and Hughes
Electronics Corp. has gained some valuable support from a large rural constituent,
with the American Farm Bureau Federation offering its support of the $26 billion
"The [AFBF] believes that the proposed merger between [Hughes subsidiary]
DirecTV [Inc.] and EchoStar Communications will provide great benefits to rural
America, making broadband services available to millions of rural residents and
expanding local broadcast coverage," AFBF president Bob Stallman wrote to
members of Congress.
The largest concern the merger has faced is whether combining the two largest
U.S. satellite-TV companies into one would severely reduce competition in rural
markets where satellite TV is the only TV option.
EchoStar CEO Charlie Ergen argued that the merger would allow the combined
company to offer high-speed Internet access nationwide, including all rural
areas, as well as to expand the number of markets into which EchoStar could offer
local TV service.
The AFBF's support should be important to rural lawmakers because the association
represents more than 5 million farming families in the United States and Puerto Rico.
At the same time, the House of Representatives' Western Caucus came out
opposing the deal, with Rep. Chris Cannon (R-Utah) calling it "unthinkable."
"After carefully reviewing the facts of the proposed merger between EchoStar
and DirecTV, we have grave concerns that such a merger may increase costs and
decrease options for our constituents who want [direct-broadcast satellite].
Thus, we are writing to you to express our opposition to the merger as proposed
and urge your agencies to exercise appropriate scrutiny," wrote members of the
Western Caucus, chaired by Rep. Richard Pombo (R-Calif.), to Attorney General
John Ashcroft and Federal Communications Commission chairman Michael Powell.
Cannon, who is vice chairman of the caucus, went even further. "I am
astonished that two large sophisticated companies would push a merger before
Congress that has so little chance of passing regulatory scrutiny," Cannon said.
"This merger as proposed is unthinkable and it should not take the Justice
Department and the FCC much time to deny it."
The television industry's top news stories, analysis and blogs of the day.