EchoStar Asks Govt to Stop Murdoch's DirecTV Bid

[Gregg Lengling]

By Peter Henderson

LOS ANGELES (Reuters) - U.S. satellite television operator EchoStar sought on Tuesday to block media baron Rupert Murdoch from acquiring control of its bigger rival, DirecTV, telling regulators that the acquisition would undermine competition and drive rates higher.

   

Murdoch's Australia-based News Corp. could charge EchoStar and cable companies much more for carrying its Fox television and sports programs, once it had its own national distribution arm in DirecTV, EchoStar Communications Corp. said in a brief filed with the Federal Communications Commission (news - web sites).


That would lead to higher rates for U.S. consumers who subscribe to cable or satellite television, said Littleton, Colorado-based EchoStar, which owns the DISH network with about 8.5 million subscribers.


News Corp. expects late this year or early next to acquire 34 percent of Hughes Electronics Corp., and control of DirecTV, which has some 11.3 million subscribers, for $6.6 billion. DirecTV is a unit of Hughes Electronics.


The company has denied it would have the motive or means to harm competition and has promised to make key programming like sports and local broadcast stations available to competitors.


EchoStar itself sought to buy DirecTV but abandoned the bid under pressure from the regulators concerned competition would suffer if the two satellite providers merged.


EchoStar argued that the government should stop the News Corp. merger or slap stiff terms on the deal.


"By acquiring its crown jewel of nationwide U.S. distribution for its core programming assets, News Corp. will have the ability and incentive to force cable firms and EchoStar to accept higher programming fees," EchoStar said.


News Corp also owns many U.S. local television stations that EchoStar said it needed to carry, or retransmit, in order to stay competitive.


Even if News Corp did not withhold programming from rivals, it could raise prices, knowing rival satellite and cable providers would have to pay up to avoid customers defecting.


All that would boil down to higher prices for consumers, said EchoStar, which asked the FCC (news - web sites) at least to cap News Corp's stake in Hughes, publish rates for programming, and stop News Corp and DirecTV from working closely together or sharing information about DirecTV competitors.


The National Association of Broadcasters, which television stations in local markets, in a separate brief to the commission also asked that the sale be blocked, saying News Corp would have the incentive to centralize control of local stations once it had a national distribution system.


News Corp has denied similar charges several times.


A spokesman for News Corp in New York could not be immediately reached for comment.