Little gossip
here we go again...C/P
DIRECTV to Buy EchoStar?
Satellite executive triggers speculation with remark at industry conference.
By Phillip Swann
Washington, D.C. (March 30, 2006) -- Could it be true?
Mike Palkovic, DIRECTV's chief financial officer, said yesterday that his company was interested in buying rival satcaster EchoStar. (The executive made his remarks to Reuters during a Bank of America conference in New York.)
While Palkovic noted that the acquisition would face regulatory hurdles, he said: "We'd be nuts not to look at it." He even said the merger would be "desirable" even if it wasn't "feasible."
I doubt that DIRECTV will buy EchoStar. As Palkovic alluded to, the Federal Communications Commission rejected EchoStar's attempt to buy DIRECTV in 2002, saying the deal would stifle competition in the satellite TV industry. (DIRECTV and EchoStar represent more than 95 percent of the satellite audience.)
However, the deal should not be entirely dismissed for three reasons.
1. Better Politics
The FCC's decision to reject the earlier EchoStar-DIRECTV deal was based in part on EchoStar's clumsy handling of the case. Led by Charlie Ergen, its irascible and always unpredictable CEO, EchoStar alienated key FCC members and staffers by repeatedly failing to submit key documents on time. The company also did a poor job of lobbying both FCC officials and congressional lawmakers.
Now led by the powerful and savvy News Corp. (and its omnipotent chairman, Rupert Murdoch), DIRECTV would not make the same mistake.
2. Better Lobbying
Four years ago, Murdoch's News Corp. launched a massive (and effective) lobbying campaign to block the EchoStar-DIRECTV deal.
Why?
Murdoch wanted to buy DIRECTV himself.
So, using his considerable influence in Washington, Murdoch helped orchestrate the deal's demise. (After the merger fell through, News Corp. purchased a controlling interest in the satellite TV service.)
If DIRECTV decided to buy EchoStar, Murdoch's D.C. connections -- and money -- could perhaps get the deal approved.
3. More Competition
With the launch of new TV services from telcos Verizon and AT&T, News Corp. could argue that competition within the satellite category is not as important as it was four years ago. In some cities, viewers can now choose from three TV providers -- cable, satellite and telephone.
The more favorable environment for a deal, however, does not mean that it will occur. But Mr. Palkovic's decision to openly speculate about one at an industry conference suggests that it's under consideration.
