John Corn
10-28-02, 04:47 AM
In a last-ditch attempt to rescue its proposed acquisition of DirecTV, EchoStar Communications has tentatively agreed to transfer dozens of communications frequencies and three satellites to Cablevision, the cable-television company that is making a push into the satellite business, people close to the companies said yesterday.
EchoStar and Cablevision have presented the plan to antitrust officials at the Justice Department as a way to potentially salvage EchoStar's proposed $25.8 billion acquisition of the Hughes Electronics division of General Motors, which includes DirecTV.
Financial terms were unclear yesterday, but it appeared that Cablevision could receive the frequencies free. The Justice Department has been leaning against the Hughes deal because of concerns that it would combine the nation's two largest providers of satellite TV service. DirecTV is the No. 1 satellite television provider, with about 11 million customers. EchoStar's Dish Network is No. 2 with about 7.8 million subscribers.
On Oct. 10, the Federal Communications Commission refused to approve the deal but gave EchoStar and Hughes 30 days to revise the terms. At least one F.C.C. commissioner said in public comments that a deal to transfer significant satellite systems to a third party could be a way to save the merger. The Justice Department has been expected to render its opinion on the EchoStar-Hughes this week.
Cablevision, the nation's No. 7 cable-television company, plans to begin its own satellite next spring and to begin offering satellite-television service later next year. Many analysts have been skeptical about Cablevision's plans because the company has appeared strapped for cash and also because they think that one satellite would not be enough to provide a nationwide television service.
But under the deal with EchoStar, Cablevision would receive the rights to use 51 satellite frequencies now controlled by EchoStar. When added to the 11 frequencies that Cablevision already owns, that would give Cablevision 62 frequencies, which would appear to be enough to provide a robust service.
In addition, EchoStar has tentatively agreed to sell Cablevision its EchoStar 3 satellite and to lease its EchoStar 1 and EchoStar 2 satellites, according to people close to the negotiations. Spokesmen for Cablevision and EchoStar declined to comment.
According to people close to the negotiations, the deal by Cablevision and EchoStar is contingent upon EchoStar's completing its acquisition of Hughes, which requires approval from both the Justice Department and the F.C.C.
The 11 frequencies that Cablevision already controls are at an orbital position that could make it difficult for consumers on the West Coast to receive the company's satellite service. Under the proposed deal with EchoStar, Cablevision would receive satellite capacity and communications frequencies at an additional orbital location farther west, making it easier for Cablevision to provide nationwide service.
In addition to the transfer of frequencies and satellites, EchoStar has tentatively agreed to share with Cablevision many of its systems for transmitting signals from local stations, according to people close to the two companies. Transmitting local broadcast stations from a satellite to consumers can be costly and complicated. Sharing EchoStar's systems would make the process easier for Cablevision.
Even if regulators and antitrust authorities approve the deal and allow EchoStar's acquisition of Hughes, it would take Cablevision years to build a satellite business. Cablevision has been looking for a potential partner to help share the financial load of the satellite project.
At the same time, Cablevision has been selling assets and paring costs in an effort to strengthen its core cable-television operation. The company could sell additional assets to underwrite its satellite plans. A deal with EchoStar, however, would jump-start the company's entrance into the satellite business.
http://www.nytimes.com/2002/10/28/technology/28DISH.html
EchoStar and Cablevision have presented the plan to antitrust officials at the Justice Department as a way to potentially salvage EchoStar's proposed $25.8 billion acquisition of the Hughes Electronics division of General Motors, which includes DirecTV.
Financial terms were unclear yesterday, but it appeared that Cablevision could receive the frequencies free. The Justice Department has been leaning against the Hughes deal because of concerns that it would combine the nation's two largest providers of satellite TV service. DirecTV is the No. 1 satellite television provider, with about 11 million customers. EchoStar's Dish Network is No. 2 with about 7.8 million subscribers.
On Oct. 10, the Federal Communications Commission refused to approve the deal but gave EchoStar and Hughes 30 days to revise the terms. At least one F.C.C. commissioner said in public comments that a deal to transfer significant satellite systems to a third party could be a way to save the merger. The Justice Department has been expected to render its opinion on the EchoStar-Hughes this week.
Cablevision, the nation's No. 7 cable-television company, plans to begin its own satellite next spring and to begin offering satellite-television service later next year. Many analysts have been skeptical about Cablevision's plans because the company has appeared strapped for cash and also because they think that one satellite would not be enough to provide a nationwide television service.
But under the deal with EchoStar, Cablevision would receive the rights to use 51 satellite frequencies now controlled by EchoStar. When added to the 11 frequencies that Cablevision already owns, that would give Cablevision 62 frequencies, which would appear to be enough to provide a robust service.
In addition, EchoStar has tentatively agreed to sell Cablevision its EchoStar 3 satellite and to lease its EchoStar 1 and EchoStar 2 satellites, according to people close to the negotiations. Spokesmen for Cablevision and EchoStar declined to comment.
According to people close to the negotiations, the deal by Cablevision and EchoStar is contingent upon EchoStar's completing its acquisition of Hughes, which requires approval from both the Justice Department and the F.C.C.
The 11 frequencies that Cablevision already controls are at an orbital position that could make it difficult for consumers on the West Coast to receive the company's satellite service. Under the proposed deal with EchoStar, Cablevision would receive satellite capacity and communications frequencies at an additional orbital location farther west, making it easier for Cablevision to provide nationwide service.
In addition to the transfer of frequencies and satellites, EchoStar has tentatively agreed to share with Cablevision many of its systems for transmitting signals from local stations, according to people close to the two companies. Transmitting local broadcast stations from a satellite to consumers can be costly and complicated. Sharing EchoStar's systems would make the process easier for Cablevision.
Even if regulators and antitrust authorities approve the deal and allow EchoStar's acquisition of Hughes, it would take Cablevision years to build a satellite business. Cablevision has been looking for a potential partner to help share the financial load of the satellite project.
At the same time, Cablevision has been selling assets and paring costs in an effort to strengthen its core cable-television operation. The company could sell additional assets to underwrite its satellite plans. A deal with EchoStar, however, would jump-start the company's entrance into the satellite business.
http://www.nytimes.com/2002/10/28/technology/28DISH.html