Lawsuit Against EchoStar has Analysts Thinking Merger
Several recent run-ins with the legal system have almost brought EchoStar to its knees. A Federal Court ruling has left EchoStar owing around $90 million in damages and with the orders to stop producing its DVR equipment because it violates TiVo patents and to turn off DVR service entirely within 30 days. And even more bad news for EchoStar comes out of Atlanta, where, due to a violation of the federal “distant network signal law” it must stop sending signals from local TV stations to over 800,000 subscribers in rural Georgia.
According to digital media consultants from The Carmel Group, the net result of these legal troubles could be a 20% transfer in subscribers from EchoStar’s Dish Network to its competitors at DirecTV. Through deals with TiVo and the adoption of an entirely different DVR format, DirecTV is immune to these difficulties, thereby putting it in a perfect position to push for a full out merger.
The keys here, of course, are in: a) Determining whether or not EchoStar CEO Charlie Ergen would be willing to work out a deal with nemesis DirecTV CEO Rupert Murdoch, and b) Convincing the federal government to allow a merger between the satellite TV giants.
Thanks to Newsfactor for the story.
UPDATE: The Federal Circuit Court of Appeals granted a stay on the decision against EchoStar and in favor of TiVo. Thanks Digital TV Weblog.
UPDATE 2: Echostar settled with the four major networks over its “distance network” transmissions for $100 million. See the fully story here.
