Antitrust issue blocked EchoStar-DirecTV deal

Joyzelle Davis, Rocky Mountain News

Published February 20, 2007 at midnight

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The last time two satellite giants tried to merge, the same antitrust concerns that analysts raise with the proposed XM Satellite Radio and Sirius marriage ultimately doomed the deal.

In 2001, Douglas County-based EchoStar made a $26 billion bid to buy larger satellite-TV rival DirecTV from owner General Motors. At the time, analysts put the odds of success at less than 50 percent, saying that regulators likely would balk at the idea of giving one company control of 91 percent of the U.S. satellite-TV market.

Turned out they were right. The Federal Communications Commission ruled against it, then the U.S. Justice Department and 23 states filed suit to block the merger. Rupert Murdoch's News Corp., which ardently lobbied against the EchoStar-DirecTV union on antitrust grounds, ultimately swooped in to buy DirecTV in 2003.

Less than four years later, News Corp. in December agreed to sell its 38 percent DirecTV stake to another Douglas County-based company, John Malone's Liberty Media. That deal, which isn't expected to face any antitrust challenges, should close later this year.

Coming full circle, analysts are speculating that DirecTV and Dish may eventually head to the altar once again. But that would be at least a few years off and contingent on phone companies such as AT&T and Verizon bulking up their pay-TV offerings enough that they're a third major competitor in the video industry.

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