Regulatory approval of the proposed merger between EchoStar Communications
Corp. and DirecTV Inc. parent Hughes Electronics Corp. likely hinges on how the
product market is defined, Federal Communications Commission member Kevin Martin
said Thursday.
'This issue is critical because it determines the number of parties that
would remain post-merger to compete with the combined entity,' Martin said in a
speech to The Carmel Group's Satellite Entertainment 2002 conference in
Monterey, Calif.
The FCC and the Department of Justice need to determine whether EchoStar and
DirecTV compete just between themselves, with all cable operators, with just
digital-cable operators, or with all video-programming providers, which would
include local TV stations, Martin said.
He indicated that a broadly defined product market improved the chances of
the merger being approved.
'This is because a more narrowly defined market results in more geographic
markets in which the number of competitors decreases from two to one. And a
monopoly is hard to approve,' Martin said.
On another subject, Martin said the commission is facing a 'high' burden
erected by federal courts if it hopes to retain a rule that requires cable-owned
satellite networks to sell their services to direct-broadcast satellite.
'I don't mean to imply that can't be done,' he added, 'but I am cognizant
that our burden of proof will be a high one.'
The courts, he said, are demanding that the FCC prove that the rule is
'necessary,' and they won't let the agency retain a rule just because it thinks
the rule is helpful or beneficial.
