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Attorney General Ellen F. Rosenblum

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Oregon Joins State/Federal Effort to Block Proposed Satellite TV Merger Between Echostar and Hughes Electronic

October 31, 2002

Attorney General Hardy Myers today announced that Oregon has joined a state/federal effort to block the proposed satellite television merger between EchoStar Communications Corporation and Hughes Electronic Corporation. A lawsuit against the only two nationwide direct broadcast satellite (DBS) television providers was filed today in US District Court in Washington, D.C.

The lawsuit against the two industry giants was brought by the Oregon Department of Justice, the Antitrust Division of the U.S. Department of Justice, and Attorneys General from 22 other states, the District of Columbia and Puerto Rico. The lawsuit alleges that the merger of EchoStar and Hughes would violate the Clayton Act, a federal law that prohibits anti-competitive practices, by taking away consumer options and placing the market for DBS customers in the hands of one corporation.

"The merger of these two companies would result in only one player in a diminishing field of satellite TV providers," Myers said. "Most consumers across the country would have their programming options reduced to a duopoly of one cable company and one DBS provider."

Myers explained that 13 percent of Oregon households are not served by cable and this represents 175,000 households in central, southern and eastern Oregon. "These Oregonians would be at the mercy of a DBS monopoly. Elimination of competition does not benefit consumers, and the court should stop this merger."

The lawsuit names EchoStar Communications Corporation, General Motors Corporation, and its wholly owned subsidiary, Hughes Electronics Corporation, and Hughes' wholly owned subsidiary, DirecTV Enterprises Inc. as defendants. EchoStar offers DBS services through Dish Network.

Dish Network and DirecTV compete with each other to attract consumers to switch from cable, including offering special packages of channels and discounts on services, installation and equipment. "Without the competition of two DBS providers, that incentive to offer lower prices and better customer service is gone," Myers said.

Attorney General Myers explained that it would be extremely difficult and expensive for any new DBS competitors to enter the market, and that there are no DBS frequencies available that cover the entire continental United States so a competitor could offer a nationwide service.

"A merger to a duopoly has never been allowed by the courts in situations where it is difficult for new competitors to enter the market, " Myers said. "The courts recognize that duopolies create an environment where there is a substantial risk of higher prices because of opportunity and incentive to collude to increase prices. This proposed merger reduces competition in cities as well as rural areas."

Earlier this month, the FCC announced that it would object to the application of EchoStar and Hughes for a license transfer. That objection was based on FCC regulations and is a separate action from the lawsuit using federal antitrust law brought by Oregon, the US Department of Justice and other states.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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