If at First You Don’t Succeed: DirecTV and EchoStar are Expected to Push for Merger Again
Word on the street–the street where all the tech-heads and business geeks like us live–is that there is a merger in the works between satellite TV providers DirecTV and EchoStar. This same merger was shot down by the FCC and the Justice Department about five years ago on the grounds that it was anticompetitive. Proponents of the deal now claim, of course, that this time its different.
Well the players involved certainly are different. When the merger was initally rejected, DirecTV was owned by GM. Anti-merger lobbying done by Rupert Murdoch’s News Corp (which itself had previously tried to buy DirecTV) was a major reason for its defeat. As a result, DirecTV took a huge hit and GM ended up selling out to News Corp for fifty cents on the dollar. See the full history here.
Now that the deal has been reborn, Murdoch claims that the market has changed. According to Murdoch, the recent entrance of telecommunications companies like Verizon into the television market leaves consumers with more options than in the past, thereby making a DirecTV-EchoStar merger non-monopolistic. This picture of the supposedly new market has satellite, cable, and telecom companies in competition with each other for viewers. The consumer is, of course, assumed to be the real winner.
The problem that Murdoch and company face, however, is that this is basically the same argument that got trounced by the current administration five years ago. Time will only tell if the politically-savvy Murdoch will be able to convince the FCC and the Justice Department of the exact opposite thing that he succeeded in getting them to believe during the last go-round.
