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DirecTV Ups News Corp. Ante To Appease Regulators

DirecTV CEO Eddie Hartenstein is sweetening his bid to hook up with News Corp. in hopes of making the deal palatable to regulators.

Just before his retailers were preparing to make the rounds on Capitol Hill, Hartenstein gave them a little something to offer the lawmakers and regulators who are scrutinizing the $6.6 billion deal.

If News Corp. is granted permission to buy a controlling interest in DirecTV from General Motors, he said, the satellite carrier will promise to carry local broadcaster channels in all 210 U.S. markets by 2008.

Hartenstein said he would try to shoot for 2006. That's the same two-year window, given an early-2004 approval, that he and EchoStar chief Charlie Ergen suggested in an attempt to sweeten the EchoStar-DirecTV merger, which eventually soured.

In a speech to his retailers, Hartenstein said News Corp. has agreed to spend approximately $1 billion on a new generation of satellites that will allow the DBS provider to greatly expand its local broadcast and HDTV programming.

The pledge also was one of several new commitments that were spelled out by DirecTV in a Sept. 22 filing at the FCC, which is reviewing the deal.

Previously, News Corp. Chairman Rupert Murdoch promised only to offer local signals in all markets when "economically and technologically feasible."

Hartenstein also said that, by the end of 2004, DirecTV will add either local channels in 30 more markets than it is currently committed to or 30 more national high-def channels, or some combination of the two.

Critics of the News Corp./DirecTV union were reviewing Hartenstein's pledges last week. He did not address their biggest worry: that control of a multichannel platform would give News Corp. leverage to demand unfair prices from cable companies and DBS rival EchoStar for its Fox programming.

The fear is that Fox would have the power to deny local cable operators Fox cable and broadcast channels by moving all of the extensive News Corp. programming stable to DirecTV unless they pay drastically higher prices.

Some cable operators have demanded that a News Corp pledge not to charge discriminatory prices for cable carriage of its in-house programming be set as a condition for merger approval.

Hardly had Hartenstein made his pitch when Senate Antitrust subcommittee Chairman Mike DeWine (R-Ohio) and ranking member Herb Kohl (D-Wis.) sent a letter to the FCC and Justice urging regulators to impose those and other conditions on the deal, including ensuring that sports programming, such as Fox's World Series coverage, would not be directed to DirecTV.