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EchoStar tries to reboot failed DirecTV merger

EchoStar met its November 27, 2002, FCC deadline to revise its stalled proposal to merge with DirectTV. This time, however, the filing was done in secrecy with no fanfare. The two companies offered - it was later revealed - to sell more assets in a last ditch attempt to save the deal.

The filing, done just hours before the long holiday weekend began, seeks to have the FCC reverse an earlier decision that blocked the merger. The revised plan - a long shot effort that’s highly unlikely to be approved - may be no more than an action by the companies to demonstrate continued interest in the merger in order to avoid large fees if either backs away from the proposed purchase before a January deadline.

The two companies told the FCC that they would be willing to sell to Cablevision Systems 62 frequencies so it could be better positioned to launch a rival national satellite service. “The creation of an additional DBS (direct broadcast satellite) player will cure all of the countervailing competition concerns identified by the commission even if these concerns were viewed in the light least favorable to the applicants,” EchoStar and Hughes Electronics, DirecTV’s owner, said in the appeal to the FCC.

Earlier, the FCC expressed skepticism that Cablevision could offer any true competition in the direct-to-home satellite market for years. FCC Media Bureau Chief Kenneth Ferree has said the two companies “have quite a hill to climb.”

The Justice Department previously concluded that Cablevision would not likely become a “sufficient replacement for the vigorous competition that now exists between Hughes and EchoStar within a reasonable period of time.”

Time is running out for the merger. Hughes’ DirecTV has suggested it will likely abandon the deal if it’s not completed by Jan. 21, 2003. Hughes would then be in line to receive a $600 million breakup fee from EchoStar.

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