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Attorney General Lockyer seeks to preserve competition by blocking merger of Nationwide Satellite Providers

Antitrust Suit Objects to Proposed Consolidation of DirecTV and Dish Network
Thursday, October 31, 2002
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer joined today in the filing of a state-federal lawsuit in Washington, D.C. to block the proposed merger of the only two nationwide broadcast satellite television providers.

The antitrust suit challenges the announced $18.9 billion merger of EchoStar Communications Corp. and Hughes Electronics Corp., contending that the consolidation would violate the federal Clayton Act which prohibits anti-competitive practices. California, 22 other states, the District of Columbia and Puerto Rico and the federal Justice Department joined in the antitrust action to preserve market competition.

"The proposed merger would curtail competition in the pay-TV market that benefits consumers," Lockyer said. "It would leave Californians in most markets being served by only one cable company and one satellite TV provider. Rural customers not served by cable would face having only one choice for service."

Lockyer noted that it would be extremely difficult and expensive for any new satellite TV competitor to enter the market. There are no frequencies available that cover the entire continental United States to allow a competitor to offer a nationwide service.

"Dish Network and DirecTV now compete with each other on many levels to attract consumers to switch from cable," Lockyer said. "Consumers benefit through offers of special packages of channels and discounts on services, installation and equipment. Without the competition of two satellite TV providers, that incentive to offer lower prices and better customer service is gone."

In separate action earlier this month, the Federal Communications Commission declined to grant the license transfer application of the satellite TV corporations. Hughes Electronics Corp., a wholly-owned subsidiary of General Motors Corp., owns the leading U.S. satellite broadcaster DirecTV. The No. 2 Dish Network is owned by EchoStar. As proposed, the merger would give a combined EchoStar and Hughes about 18.2 million subscribers.

The states joining in the antitrust action are: Arkansas, California, Connecticut, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Massachusetts, Mississippi, Missouri, Montana, Nevada, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Vermont, Washington and Wisconsin.

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