EchoStar-DirecTV in the 2011 Technological and Competitive Climate

Peter J. White, American University Washington College of Law

Abstract

The birth of satellite television took place in the late 1970s, and since then, the Direct Broadcast Satellite (DBS) industry has grown to over 30 million subscribers. In 2008, DirecTV and EchoStar—the leaders in the DBS market—had 20.1 million and 13.8 million subscribers respectively. DBS networks work by broadcasting digital signals from medium- and high-power satellites (100 to 400 watts per transponder) to receiver dish antennas as small as 18 inches. These satellites are placed in geosynchronous orbits, which means that they are always in the same position relative to the rotating earth. In the United States, the Federal Communications Commission (FCC or Commission) regulates these broadcast satellites under the authority given to it by the Communications Act of 1934. The FCC also has the authority to grant or deny mergers of regulated enterprises, including satellite radio and DBS companies.

In 2001, DirecTV and Echostar submitted merger applications to the Department of Justice (DOJ) Antitrust Division and the FCC. Although the FCC denied this merger, the Commission granted a merger of similarly market-dominant companies in its approval of the XM–Sirius merger in 2008.

Part I of this Article addresses the FCC’s merger review authority. Part II defines the FCC’s standard of merger review. Part III of this Paper will briefly discuss the approved XM–Sirius merger as well as the rejected EchoStar–DirecTV merger. Finally, Part IV discusses why the EchoStar–DirecTV merger might be approved if it were to be brought before the Commission today with a focus on voluntary commitment packages, technological advancements, and the revised 2010 Horizontal Merger Guidelines.