Broadcast satellite companies call off proposed merger

WASHINGTON (AP) — Two direct broadcast satellite companies — one owned by big cable companies, the other by Rupert Murdoch — have abandoned plans to merge, the Justice Department said Wednesday
The department in May had sued to block the proposed merger between Primestar Inc. and Murdoch’s satellite business on the grounds that it would blunt competition, and thus the prospect of lower prices.
Primestar informed the department of its decision to abandon the planned merger, said Gina Talamona, spokeswoman for Justice’s antitrust division.
The $1.1 billion deal would have given the nation’s five largest cable TV companies, which together own Primestar, a major share of the emerging business that beams TV programs from satellites directly to pizza-sized dishes in people’s homes.
The deal also would have given Primestar the last of only three national licenses to provide direct broadcast satellite, or DBS, service in the United States.
The DBS business poses the greatest direct threat yet to cable television because it can provide a multitude of channels and crystal-clear picture and sound quality.
Primestar had been negotiating with Justice to alter the deal.
The deal was opposed by consumer groups led by Consumers Union and by rival DBS companies, DirecTV and EchoStar Communications.
Together, the five cable companies that back Primestar serve 60 percent of the nation’s 67 million cable TV customers, the Justice Department has said. In contrast, DirecTV and EchoStar together have just over 5 million customers — most of them former cable TV subscribers.
The Justice Department’s lawsuit would have blocked Primestar from acquiring the DBS assets of Murdoch’s News Corp. Ltd. and MCI. The government alleged the deal would constitute an illegal monopolization and an unlawful restraint of trade.
The government said the deal would allow the cable companies that own Primestar — Tele-Communications Inc., Time Warner Inc., Comcast Corp., Cox Enterprises Inc. and US West/MediaOne — to protect their monopolies and keep out new competitors using the satellite technology. TCI and Time Warner are the nation’s largest and second-largest cable companies.