Satellite TV Deal: Fewer Viewer Choices?

N E W   Y O R K, Oct. 29 -- Is your satellite television service going to be run by a monopoly?

In a bold $25.8 billion purchase of its main competitor, EchoStar Communications Corp. is attempting to become the dominant satellite television provider in the United States. But the merger could run into antitrust problems, if the government thinks the new company would stifle viewers' choices and raise costs.

According to the terms of the deal, EchoStar, the nation's second-largest satellite television company with more than 6 million subscribers nationwide, would acquire Hughes Electronics, operator of DirectTV, the biggest satellite company in America with 10 million subscribers.

Hughes is a subsidiary of General Motors, which would retain a substantial financial interest in the new company, still to be called EchoStar. The General Motors board accepted the EchoStar bid over a long-standing offer from Rupert Murdoch's News Corp., which does not currently have a U.S. satellite television presence.

"It's a powerful combination," said EchoStar chairman Charles Ergen during a televised press conference today, announcing the merger.

It’s the Rural Thing

But the new EchoStar could be a little too powerful, say some consumer watchdogs, anticipating that millions of viewers would have their programming decisions made for them by one company.

"From an antitrust viewpoint, it's very hard to make this one fly," says Albert Foer of the American Antitrust Institute in Washington. "What the deal does not do, is provide any choice."

Some say the effects of the merger could be especially pronounced in rural areas, many of which are not wired for cable and rely on satellite television to access a broad range of channels.

"If EchoStar becomes the sole provider, it would have absolute monopoly power over those living in rural America for multi-channel TV services," said Linda Golodner of the National Consumers League in Washington, in a recent letter to Federal Trade Commission chairman Timothy Murris. "This would almost certainly lead to reduced competition, higher prices and poorer services for millions of consumers."