House Panels to Review DBS Merger

Two House committees will take a close look at the proposed merger of EchoStar Communications Corp. and DirecTV Inc. on Dec. 4, sources said last week.

Both the House Judiciary Committee and the House Subcommittee on Telecommunications and the Internet are planning to hold hearings on the same day, though at different times.

Ken Johnson, a spokesman for House Energy and Commerce Committee chairman Billy Tauzin (R-La.), said EchoStar chairman and CEO Charlie Ergen and DirecTV chairman and CEO Eddy Hartenstein have been invited to testify before the telecom panel. The hearing is officially billed as a review of the status of competition in the multichannel video-distribution market.

"We expect them to be there, as well as [National Cable & Telecommunications Association president] Robert Sachs," Johnson said.

The House Judiciary Committee has not released a witness list, but Ergen and Hartenstein are likely to testify.

The hearings would be the first review of the proposed $25.8 billion DBS deal by a Congressional panel. Some fear an EchoStar-DirecTV merger would create a DBS monopoly in markets not served by cable operators.

Ergen, who has already expressed support for plans to protect rural customers from pricing discrimination, has maintained that the merger would promote competition to dominant cable operators.

The union, announced on Oct. 29, would create a DBS powerhouse with at least 14.9 million subscribers. Although Congress does not approve mergers, lawmakers can use hearings to send signals to regulatory bodies. Tauzin has not decided whether to back the deal.

The merger requires the approval of the Justice Department and the Federal Communications Commission. Both FCC chairman Michael Powell and Cable Services Bureau Chief W. Kenneth Ferree have said the DBS merger would get a close review because it would greatly increase concentration in the DBS distribution market.

Historically, the FCC has waited for the Justice Department to conclude its review before taking action, but both Powell and Ferree have said they may depart from tradition and wrap up the FCC's review before Justice has decided whether to block the deal.

Johnson said the telecom panel would also touch on FCC policies that require the sale of satellite-delivered cable networks to multichannel competitors; the agency's cable-ownership rules; and, to some extent, FCC broadcast TV-station ownership rules.

Cable rates — especially the effect of sports-programming costs on overall cable bills — would also be a focus of the hearing, Johnson said.

The Senate Commerce Committee and the Senate Judiciary Committee are expected to hold hearings on the merger as well, but none have been scheduled, sources said last week.