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EchoStar cleared to buy VisionStar

Echostar won FCC approval on Tuesday to acquire VisionStar, which owns rights to launch a satellite that can deliver broadband service.

The deal increases EchoStar's stake in the company from 49.9% to 90% in return for $1.3 million investment. The transaction brings EchoStar's total investment in VisionStar to $2.84 million since Nov. 2000. The satellite TV provider also agreed to provide VisionStar with a $4 million line of credit.

Echostar has an option to buy the remaining 10% stake controlled by VisionStar President Shant Hovnanian when VisionStar's satellite begins commercial operation.

The deal was opposed by Pegasus Development Corp. and TRW Inc., which argued that Hovnanian violated FCC rules preventing companies that have not built their satellite networks from profiting from license sales.

The FCC found, however, that he will not profit from deal when taking account for his prior investments. The government also rejected opponents' complaint that Echostar's purchase of a 49.9% stake last year was an unauthorized license transfer. - Bill McConnell