Merger Partners: Deal Was a Plus for Consumers

[Steve Mehs]

Despite the stiff resistance merger partners EchoStar and Hughes/DirecTV received from regulators, both companies said they still believe the proposed combination was always in the best interest of consumers.

Hughes President and CEO Jack Shaw said the proposed merger "would have been a victory for consumers nationwide, and for our shareholders.

"We worked hard on it to get the required regulatory approval and are disappointed that we were not able to complete the merger," he said. "However, since the merger couldn't be completed, we concluded that this settlement is the best alternative for Hughes and places us in the best position to move ahead with our business."

EchoStar CEO Charlie Ergen said, "Obviously, we are disappointed in the final outcome. However, EchoStar will continue to seek alternative, innovative ways to provide competition to the rapidly consolidating cable industry and to provide more choices for all consumers."

Ergen said Monday that with the newly created Comcast cable giant, and given the recently-announced rate hikes for several cable companies, "We are very confident that we can go out and compete, and put the best product out there."

The merger proposal ran into opposition from the Justice Department's antitrust staff and attorneys general in 23 states. The Federal Communications Commission also had concerns with the merger, and put the proposal up for an administrative judge hearing, effectively killing the deal.

From SkyReport (http://www.skyreport.com/skyreport/dec2002/121102.shtm#two) (Used with Permission)

[Jacob S]

It is good and bad for consumers, the question is does the good outweigh the bad? In what ways would it had been good and bad for consumers and to the company is what we have to ask.

[gowilk]

which consumers would it have been good for is an obvious question.
Essentially if you're in an area where both services have LIL already then competition is reduced from 3 to 2 choices, if you're in an area not served by cable, competition is reduced as well. Only consumers who would benefit are cable viewers in areas currently not served by LIL from both services but are served by cable.
High-speed internet competition was advertised but it already exists within both satellite companies so the only gain could've come from reducing prices which was NEVER proposed in the merger.
As long as both services are economically viable it makes NO sense to allow a merger, e* needed to sell the deal as saving consumers from throwing away their directtv receivers or else offering a cutrate broadband internet service. Another option could have been pushing HDTV nationwide but they didn't have the bandwidth even with all those satellites to promise that. Since they did none of those they got exactly what they should have expected.
- Massive complaints from the cable industry (who feared a single satellite service going full-tilt against their business)
- Massive complaints inspired by Pegasus who thought they were being cut out of the loop.
- Indifference by most satellite and cable users who didn't see a real benefit to them.
In hindsight it seems obvious that only under some extreme example of regulatory indifference could this merger ever having taken place.
OH well, on to Plan B, higher rates, fewer channels and more whining.

[raj2001]

Originally posted by gowilk
OH well, on to Plan B, higher rates, fewer channels and more whining.

Don't forget more excuses.

[Jacob S]

Charlie Ergen himself did say that internet pricing would be cut in half if both providers would have merged. It may not have been proposed in the merger deal though because Charlie got out of the internet business (Starband that is)

It should make no difference if consumers would have to rid of their Direct hardware if they were getting new ones for free anyways, in which would be good, getting a free new updated receiver.

[platinum]

free new buggy echostar receivers.

[gowilk]

Originally posted by Jacob S
It should make no difference if consumers would have to rid of their Direct hardware if they were getting new ones for free anyways, in which would be good, getting a free new updated receiver.

yeah there were 11 million d* users out there wondering how Charlie was going to live up to his "if" statement that existing consumers would not be impacted but if you really believe you were going to get brand new echostar receivers for free, you also believe in the Easter Bunny, Santa Claus and 5000 on Nasdaq.

Existing users were going to get strung along and essentially frozen with their existing equipment until they screamed UNCLE, that's the "charlie" way of doing business.

So NO i didn't believe and never did believe that existing users were going to get something for nothing out of it. Charlie ALWAYS used the weasel word "if" to describe what would happen to existing users.

[Jacob S]

I do agree with that to a point. I mean, it is going to cost someone something. He would have done it but would have had to make up for it somewhere. It does not cost Dish that much to make a receiver. It was also a cost of the merger that they had figured on, just like there would be a price of buying out. They were to more than make up for these costs by combining programming costs getting better deals on them, having more satellite space saving money on launching new ones, providing locals for more/all markets increasing revenues, and so on. They could have raised prices $1 and made up for it in about a year's time for the receiver replacements. They would have saved more than that in programming costs anyways.