FCC Leaning Against EchoStar-DirecTV Deal

Chairman Michael Powell has already expressed concerns that the deal would create significant concentration in the direct broadcast satellite business:

U.S. Federal Communications Commission staff are recommending the agency block EchoStar Communications Corp.’s plans to acquire rival satellite television provider DirecTV and its parent Hughes Electronics, people familiar with the situation said on Friday.

FCC staffers have determined that the combination would not be in the public interest, the people said, declining further identification. Staff at the U.S. Justice Department antitrust division have also recommended that the deal be blocked.

….division have forwarded the recommendation to division chief Charles James, sources said last week. James has since said he would be stepping down later this year from his position.

If that agency ultimately decides to go to court beforehand to prevent the deal, the two companies could fight the battle to complete the $17.1 billion deal there or abandon it before the FCC moves. Typically the two agencies coordinate reviews of deals.

An FCC spokeswoman declined to comment.

EchoStar and Hughes’ DirecTV have argued that the deal would increase competition in the pay-television market, reduce inefficient use of spectrum to deliver programming, and give consumers more local channels and high-speed Internet service.

Charlie Ergen, EchoStar chief executive, has been making the rounds in Washington trying to overcome the opposition building against the deal which would give the new company some 18.2 million subscribers.

The FCC’s media bureau chief, Kenneth Ferree, has said in the past he was concerned that the deal could hurt consumers because it would reduce to one the number of pay television operators available in rural areas and in urban services cut the available services to two.

He also has said most of the best satellite slots would be held by the combined companies….