LAWYERS SAY ECHOSTAR AND DIRECTV ARE POISONING FCC WELL
MONTEREY, Cal. -- EchoStar and DirecTV are ruining their credibility with FCC, creating much deeper and longer term problem than likely failure of EchoStar’s takeover bid, industry lawyers warned at Satellite Entertainment conference here late Wed. FCC commissioners and staff “believe they are being treated with disrespect by the 2 companies,” panelist Scott Harris, former FCC International Bureau chief, said: “I don’t think that’s a good way to deal with a regulator, whether or not you've got a merger.”
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
FCC 2-dish local-stations order this month took EchoStar to woodshed over what Commission called multiple willful and disingenuous rule violations, Harris said. Worse, Comrs. Copps and Martin took unusual step of issuing separate statement specifically questioning EchoStar’s good faith in trying to comply with rules, Washington attorney Phil Spector said. “None of that bodes very well for the merger,” he said, because “candor and credibility are essential to everything we do” at FCC.
Then in Northpoint decision this week (CD April 24 p1), Commission disregarded satellite companies’ claims new service could interfere with them. “The interference argument has been the last refuge of scoundrels, and the FCC has become quite jaded,” Harris said: “The satellite industry has cried ‘wolf’ so many times it has a credibility gap.” Commission may even be overreacting by rejecting valid interference claims out of hand, he said. Spector said spectrum and market capacity would permit possible new satellite entrant to emerge some time (see separate story, this issue).
Panelists cited more friction points. Steve Coran, representing National Rural Telecom Coop (NRTC), critic of EchoStar attempt to acquire DirecTV, said many more households than 3% cited by deal opponents weren’t passed by cable -- some 25 million people -- and they would have only one multichannel option if deal went through. Dozens of what NRTC charged were EchoStar policy issue flip-flops “are the kinds of things that are wearing thin on the FCC staff,” Coran said. He said they raised doubts on EchoStar’s promises of post-takeover nationwide pricing, to preclude rural gouging, and ubiquitous availability of local stations. He said EchoStar and DirecTV also had frustrated Commission through unresponsiveness to information requests. Harris said that could reflect EchoStar belief Justice Dept. opinion on deal, likely preceding FCC’s, probably would decide case, or company simply might have given up hope.
At this rate, acquisition couldn’t be approved before fall, Coran said. He said EchoStar and regulators were too far apart to agree on concession conditions needed to consummate deal. “The merger is dead,” Harris declared: “It’s been dead for some time. The corpse is still moving, but very slowly.” EchoStar could owe DirecTV $600-million break-up fee under some circumstances, Coran said. Conference organizer Carmel Group said DirecTV, event co- sponsor, and EchoStar, not sponsor, declined invitations to appear on panel.