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CE Vendors Are in Ergen's Corner

Two of DirecTV Inc.'s largest national retailers and the direct-broadcast satellite company's first consumer hardware supplier last week publicly backed the proposed merger of EchoStar Communications Corp. and DirecTV parent Hughes Electronics Corp.

Thomson Multimedia praised the merger's ability to "strengthen multichannel options for consumers in a fiercely competitive market," director of public and trade relations David Arland wrote last Monday.

In a letter to the heads of the Department of Justice and the Federal Communications Commission, Thomson said that by expanding the number of high-definition television channels on a combined DBS platform, EchoStar could invigorate the digital television transition by encouraging cable operators and broadcasters to offer more HDTV programming.

Thomson recently signed a deal to make Dish Network systems for EchoStar, whether or not the merger is approved.

In FCC comments last Monday, Circuit City Stores Inc. cited increased competition against incumbent cable companies, and the additional local broadcast stations and high-definition programming that DBS could deliver following spectrum consolidation, as primary reasons to support the merger.

RadioShack Corp. also issued a press release in favor of the merger.

"A strong satellite industry is essential to enhancing competition in the marketplace for multichannel video and data services," chairman Leonard Roberts said. "This merger will expand consumer choice and fuel innovation and growth, which ultimately benefits consumers."

In addition to selling satellite video and data services, national consumer electronics retailers over the past few years have begun to sell competitive services, such as digital cable, cable modems and digital-subscriber line connections.

But because DBS offers national availability and pricing, it's an easier model for a large retail chain to embrace.


Two years ago, EchoStar sued DirecTV, claiming the DBS company used market clout to keep Dish Network products out of larger retail chains, such as Best Buy, Circuit City and RadioShack. That suit and DirecTV's countersuit were dismissed last fall following the merger announcement.

Tellus Ventures Associates president Steve Blum said he's not surprised CE companies support the merger, even given EchoStar chairman Charlie Ergen's past acrimony.

"They don't take things personally," Blum said. "It's a very competitive business. It can get pretty rough and bare knuckles."