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In order for EchoStar and Hughes - parent of DirecTV - to complete their proposed $26 billion combination, the merging entity will likely agree to some concessions.

That's the opinion of Tim O'Neil at SoundView Technology. In a research note released Tuesday, O'Neil said he believes getting the deal done will ultimately come down to a number of concessions EchoStar is willing to accept.

Those concessions could include: Giving away wing satellite orbital slots for future competitive use; aiding Pegasus and the National Rural Telecommunications Cooperative, which both sell DirecTV in rural areas; national pricing, which the companies have already promised; and carriage of local TV into every market, also already proposed.

On the NRTC/Pegasus concession, O'Neil said it's possible that antitrust officials at the Justice Department may ask the companies to support the rural satellite TV providers so that a viable competitor in the market remains. Helping to support an ongoing PGTV/NRTC concern could involve subsidizing replacement equipment for subscribers impacted by any shift to a new platform, he said.

In his note, O'Neil reiterated his "outperform" rating and $17 price target for the Hughes-GMH stock. He added that DirecTV is on track to meet its 225,000-250,000-subscriber addition guidance for the second quarter.

It's believed that various satellite TV executives have been meeting with Justice Department officials on the proposed merger throughout the month. Observers and company officials said a decision on the deal should come from regulators in the September/October timeframe.

From SkyReport (Used with Permission)
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