ERGEN: DISH RIVALS LINING UP, DEBUNKING MONOPOLY CLAIMS
MONTEREY, Cal. -- EchoStar CEO Charlie Ergen said proliferation of new satellite TV offerings, including one announced Thurs. by SES Americom (see separate story), demonstrates his proposed takeover of DirecTV isn’t monopolistic. “We're not in a market that’s going from 3 [providers, including cable] to 2,” Ergen told Satellite Entertainment conference. “We're going from 3 to 4, or 3 to 5 or 3 to 6.”
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He cited as potential new competitors SES, companies using Northpoint Technology’s satellite-terrestrial broadband architecture, a possible Cablevision-backed venture, Pegasus and unspecified Canadian entrant. “We've seen not less than half a dozen companies come in and say: ‘We're going to come in and compete with EchoStar-DirecTV,'” Ergen said. “I think it validates what we've said all along, which is that we're up against competition, whether it be from the ground or the sky. It’s here; it will come… A merger of DirecTV and EchoStar is good for consumers. It doesn’t create a monster… It’s only a positive” for EchoStar and DBS as they compete against much larger cable industry, Ergen said.
Ergen said merger regulators at FCC and Justice Dept., unlike opponents and critical commentators, will have all facts. “That’s why [DirecTV CEO] Eddie [Hartenstein] and I are so confident on the merger,” Ergen said. Hartenstein said he still expected govt. decision before Oct.
Merger critic Bob Phillips, pres. of National Rural Telecom Coop, dismissed Ergen’s point on competition. He said various players -- including HBO, MCI and News Corp. -- had promised satellite ventures but they hadn’t panned out. “Is it real?” Phillips asked of new potential competition: “Is it effective? Is it here now, or is it prospective? We definitely think it’s prospective.” Merger would leave rural areas with no pay-TV alternative to merged satellite operator, Phillips said. “That’s a monopoly, and my lawyers tell me that’s not legal.” National pricing pledges are “idle promises” as protection for rural customers, he said. Merged company could reap $700 million in increased rates from rural America over 3 years and still compete with cable in urban areas, he said. Ever-combative Ergen repeatedly challenged Phillips to quit “whining” and risk capital backing a new competitor.
SES Americom CEO Dean Olmstead acknowledged proposed launch of satellite-delivery platform: “Our crystal ball is not clear enough to know that it’s going to work. But it’s something we do every day [with Europe’s SES Astra]… We're going to give it a try.” Olmstead said DirecTV and EchoStar already have collected “low-hanging fruit” in market, and attracting new customers becomes increasingly hard. For “small little competitor like us, with less capacity,” it’s crucial to break “natural monopoly” over existing customers by allowing all installed dishes to receive all available services, he said. “It’s technically all quite doable.” Ergen replied: “I think that’s an interesting idea. The question is how you go about doing that.” He would love ability to offer his customers new channels via SES, he said. But “since we invest $500-600 in a customer [acquisition] we wouldn’t that investment to go away” uncompensated, he added.