Minorities protest EchoStar-Hughes

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Protesters marched on EchoStar Communications’ D.C. office Feb. 11 urging the rejection of the satellite company’s $26 billion merger with Hughes Electronics. Several groups claimed that the merger would cut programming available to African-Americans.

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WASHINGTON – Toting signs reading, ‘We’re dis’n the DISH,’ and ‘Access for African-Americans,’ protesters marched on EchoStar Communications Corp.’s Washington office Feb. 11 and urged rejection of the satellite company’s $26 billion merger with Hughes Electronics Corp.

The merger would diminish the amount of available programming for African-Americans nationwide, several groups charged.

‘Given the corporate culture we’ve encountered, the issues of African-Americans would not be given a fair chance if this merger was completed,’ said the Rev. Horace Sheffield III, president of the Michigan chapter of the National Action Network, a black advocacy organization. About 300 protesters, including the Rev. Al Sharpton, also attended the rally.

Specifically, Sheffield is concerned that after the merger EchoStar could drop The Word Network, a broadcast channel aimed at African-Americans that is available on DirecTV Inc.’s satellite television package. He added that that NAN, the National Association of Black Organizations and the Communication Workers of America, a Washington-based communications and media union, have joined forces to block the merger.

But EchoStar spokesman Marc Lumpkin said in a statement that the satellite network carries many channels for African-Americans and other minorities. These include Black Starz, a movie channel; TV Asia, a news and entertainment channel aimed at the Indian-American community; and Al Jazeera, an Arabic news channel.

Lumpkin added that EchoStar would ‘eventually’ carry The Word Network after the merger closes. The Colorado-based satellite company also has started carrying a new African-American network, CoLours Television Network.

John Stone, an analyst with New York investment bank Ladenburg, Thalmann & Co., said the real reason behind the protests is that startup TV outlets need to save money. He said many television stations without proven commercial appeal, such as The Word Network, have to invest large in sums in satellite concerns in exchange for agreements to carry their content. For example, Vivendi Universal SA recently invested $1.5 billion in EchoStar, which will carry five channels owned by the French media giant.

‘If you can embarrass EchoStar into giving you something valuable that normally firms have to pay for, then that’s a good strategy to save money,’ Stone said.

The analyst added that the protesters are unlikely to have much impact on the merger. ‘They will be a voice which will be listened to, but there are many groups weighing in on this,’ he said. The more serious issue are antitrust concerns that it will create a paid-TV monopoly in the 3.3% of American homes where cable isn’t available, Stone said.

In a separate slap at the merger, Donald Manzullo, R-Ill., chairman of the House Small Business Committee, sent a letter to Attorney General John Ashcroft on Feb. 7, urging rejection of the merger on grounds it will hurt small businesses such as restaurants, bars and hotels, that will have to pay higher prices for satellite TV services.

But other organizations have are supporting the merger. Citizens For A Sound Economy, a free-market rights advocacy group in Washington, said the merger makes sense because cable operators, especially in urban areas, will find themselves with a stronger competitor. The National Alliance of Medical Researchers & Teaching Physicians also backs the deal, saying the merged company can up spending to develop broadband services, which could promote adoption of telemedicine.

Opposition marches

Protesters rallied in front of EchoStar Communications Corp.’s Washington office Feb. 11, opposing the satellite company’s $26 billion merger with DirecTV. Concern that some minority programming will be cut if the deal is completed prompted the march.

Company Hughes Electronics Corp. EchoStar Communications Corp.

CEO Jack Shaw Charlie Ergen

Headquarters El Segundo, Calif. Littleton, Colo.

Date Action

9/26/00 General Motors to spin off Hughes Electronics Corp.

and its coveted DirecTV Inc. unit

12/05/00 GM issues conditions making sale of Hughes difficult

3/16/01 DirecTV would consider buying competitor EchoStar

4/30/01 News Corp. reportedly willing to take a 30% stake,

instead of 35%, in Hughes Electronics

5/03/01 EchoStar gearing up to challenge News Corp. for

DirecTV

7/11/01 EchoStar reportedly has financing lined up to battle

News Corp.

7/31/01 DirecTV raises $130 million from share sale

8/05/01 EchoStar bids $32 billion in stock for Hughes

Electronics and its DirecTV network

8/06/01 Arbs shrug off $30 billion EchoStar-Hughes deal

10/28/01 EchoStar wins DirecTV for $25 billion

11/01/01 FCC forms panel to review DirecTV deal

11/07/01 FCC official says EchoStar-DirecTV deal could breach

antitrust law

11/16/01 EchoStar claims DirecTV deal will bolster competition

in argument to US Justice Department

12/04/01 EchoStar, DirecTV file merger application with FCC

12/14/01 Vivendi takes 10% EchoStar stake for $1.5 billion

in cash

1/02/02 Lawmakers file objections with FCC on EchoStar-DirecTV

merger

1/03/02 The American Farm Bureau Federation says in a letter

to Congress that it supports the merger since the deal

would expand broadband and local television coverage

in rural areas

1/16/02 Thirty state attorneys general may file lawsuit to

derail EchoStar acquisition of DirecTV

1/24/02 NRTA and ACA fear an EchoStar-DirecTV merger would

harm small cable companies

2/11/02 Protesters march on EchoStar’s Washington office

protesting the company’s planned merger with DirecTV.

Concern surrounds minority programming being cut

should the merger be completed

Source: The Deal