Satellite TV merger year 2001

October 2001, General Motors Hughes, as the parent company of Direct TV and EchoStar Communications Cooperation, as the trader of Dish Network agreed to a merger. According to the agreement, the new developed company will provide a better experience to their satellite TV customers by providing them a wider choice of HDTV channels as well as more local channels selection. Nevertheless, this did not happened as the United States Department of Justice blocked the combination of these two satellite TV giants.

Many people curious why this would have happened – which is why we will review the reasons here:

1. The merger would produce a monopoly situation in United States home TV business

Competition encourages progress and a merger would essentially result in less improvement. The merger would have leave millions of U.S. citizens no choice in selecting their home TV system. At current time, there are more than 20 million homes do not have the access to cable TV in U.S. As both Dish Network and DIRECTV combined, this will apparently create a monopoly situation in these areas.
Also, these two satellite TV companies are growing extremely rapid; causing cable TV companies to loose many customers for the past few years. The merger would have brought cable TV into a harder time in winning the market competition. Some might survived but some of them might couldn’t get through it and collapse – causing TV business in United States monopolized by the merger.

2. EchoStars proposed self-regulation does not compensate for the basic monopoly issues

EchoStar and Hughes promised local TV programming to all 210 TV markets. However, the day after this promise, EchoStar asked the Supreme Court to overturn a law that required local carriage. They said they had no intention to carry all channels with the new company. At the time, local channels were available in just 41 markets while the 2 companies together already had the technology available to provide local programming in all 210 markets. A competitive market is more likely to speed up these services than a self regulated monopoly.

A proposed national pricing plan that would guarantee that prices would be the same in both rural and urban areas was also not accepted as prices could be set too high.

The merger would create a monopoly position for broadband internet services In areas that are not served by DSL or cable, the only alternative to broadband internet services is via satellite. The merger would create a monopoly for broadband internet services in these areas.

Over all it seemed that without any other satellite TV providers a merger of the 2 companies was not possible. The public's interest was just not served by a merger (or at least not enough).

Some markets just don't have much competition because of their nature. Satellites are expensive to build, put into orbit and operate. The fact that there are 2 providers and not just 1 is a blessing for the public and everyone can make a choice.