spacetoday.net: Lawsuit filed against EchoStar-DirecTV merger

Posted: Fri, Nov 1, 2002, 6:42 AM ET (1142 GMT)
The US Justice Department and 23 states have filed suit in federal court to stop the merger of satellite television providers EchoStar and DirecTV. The lawsuit, filed in federal district court in Washington, DC, seeks to block the merger because the combination of the two companies would reduce competition for television services and create a virtual monopoly in areas where cable television is not available. The companies had hoped to head off a lawsuit by meeting with Justice Department officials earlier in the week and convincing them that changes they planned for their merger, including transferring satellites and frequencies to a new competitor, Cablevision, would be sufficient to permit the merger to go through. the lawsuit, plus formal opposition to the merger announced by the FCC earlier in October, is likely to all but kill the planned merger. EchoStar is obligated to pay DirecTV a $600 million breakup fee if the merger does not happen by January 21, 2003, and also purchase satellite operator PanAmSat for $2.7 billion, although some believe that EchoStar will seek ways to get out of those commitments.