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Direct TV And Dish Network Merger


 

In October 2001 General Motors Hughes, which is the parent company of DirecTV, and Echostar Communications Corp., which is the main trader of Dish Network agreed to a fusion. This coalition will improve the services for satellite TV subscribers, because of the increased number of HDTV channels. Another improvement will be the availability of local channels for all satellite viewers. Alas, this wonderful coalition was not to be. The US Department of Justice would not allow it, because of one main reason:

A monopoly situation would be created

A monopoly situation will be created by the lack of a healthy competition. When there are only two companies that are leaders worldwide in satellite viewing, there obviously will be competition. This competition is sure to bring about progress even if the results are seen only in the long run. When these two companies merge, there is going to be no progress whatsoever because there is no competition. This fusion affects the general public too. In the beginning people had a choice between two networks, but now if this fusion is going to be implanted people will get only one service, which clearly is a monopoly situation. Echostar claimed that the merger would be of great help to them to compete against their competitors, the cable TV biggies.

The Echostar (Dish Network) proposal

After this disapproval by the US Department of Justice, Echostar asked the Supreme Court to do away with the law that required local carriage. They also said that they had no intention of carrying all the channels with the company. When the local channels were available in just 41 markets, Echostar and Hughes together had the technology to provide programming to 210 markets. A competitive market is more likely to speed up the services than a self regulated monopoly.

Another proposal concerning the national pricing plan, which would guarantee that prices would be the same in both the rural and urban areas, was not accepted either because there could be a chance of the prices being set too high.

This merger might also create a monopoly position for broadband internet services. In areas where there is no cable or DSL, the only other choice to get broadband internet services is through the satellite. A merger now would create a monopoly for broadband internet service in these areas.

A merger at this time, when there are no other satellite TV providers, is impossible. Nobody will be benefited by such a merger. There is more entertainment and enthusiasm because of the availability of two different satellite TV providers. When this choice is not going to be there, the public are going to be deprived of their rights of making a choice.

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