EchoStar Races to Save DirecTV Deal

[Gregg Lengling]

WASHINGTON -- EchoStar Communications Corp. moved Tuesday to revive its proposed merger with satellite TV rival DirecTV, but a federal judge rejected EchoStar's bid for an emergency trial to hear the government's lawsuit blocking the deal.

In a request that government attorneys called unreasonable, EchoStar asked U.S. District Judge Ellen Segal Huvelle to begin a trial on Nov. 18 and limit it to 10 days.

"Clearly it was a ploy," said Missouri Atty. Gen. Jay Nixon, one of 23 state officials who also oppose the merger. "Based on the level of comments and the complexities of the technical issues, that's absurd."

Government attorneys estimate that a trial -- which would be one of the biggest antitrust battles ever waged -- would last four to five weeks.

The proposed merger between EchoStar and DirecTV's parent, El Segundo-based Hughes Electronics Corp., would have created a satellite television giant with 18 million customers nationwide. But the deal suffered a serious blow last month when the Federal Communications Commission and the Justice Department both rejected the deal. Regulators said the merger would give the combined company a pay-TV monopoly in many rural markets, resulting in higher prices and decreased service.

At a hearing in Washington, Huvelle denied EchoStar's request, questioning whether there was sufficient grounds to grant an expedited trial.

An EchoStar spokesman said the company would push for a trial at the earliest possible date while simultaneously looking for ways to settle the case.

"We intend to continue to work to explore remedies that might satisfy the Department of Justice," said EchoStar spokesman Marc Lumpkin.

"We're disappointed that the district court denied our request for the expedited trial," said Hughes spokesman Richard Dore. "We will continue to consult with EchoStar on our next options."

EchoStar is racing to save its merger with Hughes by Jan. 21, when the merger agreement between the companies formally expires.

But Huvelle told the companies that's not her problem. She noted that it was within the companies' power to extend the Jan. 21 date if they want.

DirecTV officials, who are increasingly reluctant to pursue the deal, have said they do not expect to extend the agreement.

After their request for an expedited trial was denied, EchoStar attorneys asked the judge to set a January trial date, according to a Justice Department spokeswoman.

Deputy Assistant U.S. Atty. Hew Pate countered that the Justice Department would prefer a trial in June.

The judge indicated that the earliest possible trial date would be late February or early March. She scheduled another hearing for Thursday to discuss the matter.