DOJ: News Release

Montana Joins State-Federal Effort to Block Satellite TV Merger

HELENA – Attorney General Mike McGrath announced that Montana has joined a lawsuit filed today in federal district court in Washington, D.C. to block a proposed merger between the only two nationwide direct broadcast satellite (DBS) television providers.

The lawsuit against EchoStar Communications Corp. and Hughes Electronics Corp. was brought by Montana, the Antitrust Division of the U.S. Department of Justice and the Attorneys General of 22 other states, the District of Columbia and Puerto Rico.

McGrath said the merger of EchoStar and Hughes would violate the Clayton Act, a federal law that prohibits anti-competitive practices, by taking away consumer options and placing the market for DBS customers in the hands of one corporation.

“The proposed merger is bad business for Montana,” McGrath said. “Montanans in rural areas and small towns deserve competitive prices and the opportunity to choose the service that works best for them. Filing this lawsuit is one step toward keeping those options available.”

The lawsuit was filed today in U.S. District Court in the District of Columbia and names EchoStar Communications Corp.; General Motors Corp. and its wholly-owned subsidiary, Hughes Electronics Corp.; and Hughes’ wholly-owned subsidiary, DirecTV Enterprises Inc. as defendants. EchoStar offers DBS services through Dish Network.

McGrath said Dish Network and DirecTV compete with each other on many levels to attract consumers to switch from cable, offering special packages of channels and discounts on services, installation and equipment.

“When the competition between two DBS providers is gone, the incentive to offer lower prices and better customer service is gone as well,” McGrath said.

McGrath added it would be virtually impossible for any new DBS competitors to enter the market. There are no DBS frequencies available to allow a competitor to offer nationwide service.

“At best, most consumers would be left with a choice of one cable and one satellite provider,” McGrath said. “A merger to a monopoly — which is what would occur in many of Montana’s rural areas — has never been allowed by the courts in situations where it is difficult for new competitors to enter the market.

“The courts also recognize that duopolies create an environment where there is a substantial risk of higher prices.”

Earlier this month, the FCC announced that it would object to the application of EchoStar and Hughes for a license transfer. That objection was based on FCC regulations and is a separate action from the lawsuit using federal antitrust law brought by the Department of Justice and the states.

Arkansas, California, Connecticut, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Massachusetts, Mississippi, Missouri, Nevada, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Texas, Vermont, Washington and Wisconsin, the District of Columbia and the Commonwealth of Puerto Rico are also named in the suit opposing the Echostar/Hughes merger. Missouri is the lead state on the lawsuit.

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