DirecTV and DISH Network Merger
DirecTV and DISH Network Merger
By Gary Davis
Dish-Network-Satellite-TV.ws
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It was in October 2001 that General Motors Hughes (Parent
company of Direct TV) and EchoStar Communications Corp., trader
of Dish
Network agreed to a merger. The new company would have
improved the services for satellite TV clients by adding many HDTV
channels and local channels would then be available to all satellite TV
viewers. However, the US Department of Justice blocked the
merger. Why did they do that?
- The merger would create a monopoly
position
When merged the new company would
serve all of the United States without any competition. As we
all know, competition spurs progress and a merger would
basically result in less progress. At the present time about 25
to 35 million homes do not have access to cable TV services.
Those people have the choice between 2 satellite TV
companies. The merger would reduce this to just 1 company, which
clearly is a monopoly position that is not allowed. Even in
areas with cable TV the merger would result in just 2 providers,
of which each has a monopoly on its own technology. Further,
EchoStar claimed that the merger was needed to be able to
compete against the cable TV Giants. However, satellite TV was
growing very fast while cable TV was loosing clients. Out of
every 3 new cable/satellite TV clients, 2 would go for satellite
TV. - EchoStars proposed self-regulation
does not compensate for the basic monopoly issues
EchoStar and Hughes promised local TV programming to all
210 TV markets. However, the day after this promise, EchoStar
asked the Supreme Court to overturn a law that required local
carriage. They said they had no intention to carry all channels
with the new company. At the time, local channels were available
in just 41 markets while the 2 companies together already had
the technology available to provide local programming in all 210
markets. A competitive market is more likely to speed up these
services than a self regulated monopoly. A proposed national
pricing plan that would guarantee that prices would be the same
in both rural and urban areas was also not accepted as prices
could be set too high. The merger would create a monopoly
position for broadband internet services.
In areas that are not served by DSL or cable, the only
alternative to broadband internet services is via satellite. The
merger would create a monopoly for broadband internet services
in these areas. Over all it seemed that without any other
satellite TV providers a merger of the 2 companies was not
possible. The public