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FCC Rejects EchoStar-Hughes Merger

The Federal Communications Commission Thursday rejected as anti-competitive
the proposed merger between EchoStar Communications Corp. and DirecTV Inc.
parent Hughes Electronics Corp. -- the first major merger the agency has killed
on its own since 1970.

The Republican-controlled FCC voted unanimously that the direct-broadcast
satellite merger was contrary to the public interest and refused to approve the
transfer of spectrum licenses under its jurisdiction.

'The combination of EchoStar and DirecTV would have us replace a vibrant
competitive market with a regulated monopoly. This flies in the face of three
decades of communications policy,' said FCC chairman Michael Powell, who raised
questions about the deal on the day it was announced a year ago.

Powell, at an FCC press conference, said the merger would have eliminated a
viable pay TV provider in every market in the country and would have left
millions of Americans who are without cable with only one pay TV choice 'now and
in the foreseeable future.'

In terms of process, the FCC has referred the merger for a hearing before an
administrative law judge, whose decision would require approval by the four FCC
commissioners. A ruling by the judge could take months to arrive.

The Department of Justice, which is also reviewing the merger, has not
released a decision.

The FCC action all but kills the merger, Legg Mason media and
telecommunications analyst Blair Levin said.

Consumers Union cable analyst Chris Murray said that although the merger had
problems, it presented the FCC with a real opportunity to use market forces to
check rising cable rates.