Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

Oct 31 2002

SEATTLE -- Washington joined 21 other states and territories, the District of Columbia and federal regulators today in formally opposing the proposed merger of the country's two main satellite television services.

In papers filed in U.S. District Court for the District of Columbia, the states and the U.S. Department of Justice Antitrust Division argue that allowing the merger of EchoStar, parent company of DishTV, and Hughes Electronics, owner of DirecTV, would result in a company with virtual monopoly control over the satellite television market.

"Satellite television's attraction is the choice of programming it offers consumers," said Attorney General Christine Gregoire. "This proposed merger would strip consumers of their most fundamental choice and leave them with one company with near total control over price and selection."

Regulators say that although satellite television competes for customers with cable television operators, its ability to transmit fully digital, high-definition signals make satellite television a market of its own.

Furthermore, cable television has not reached some rural areas in the state, where consumers are wholly dependent on satellite television.

The proposed merger has been preliminarily rejected by the Federal Communications Commission, which ruled that combining EchoStar and DirecTV would reduce competition for pay TV services. A formal hearing is set on that issue for later this year.

Currently, the two companies reach 18.2 million subscribers, more than 95 percent of the U.S. satellite television market.

In an effort to make the proposal more acceptable to regulators, EchoStar proposed selling or leasing satellite-transmission capability to Cablevision Systems Corp., a New York-based cable television operator that plans to enter the satellite television market.

Market analysts, however, say it is highly unlikely that Cablevision would be able build itself into a viable competitor quickly enough to satisfy federal and state regulators.