Deals

by Mike Masnick




Latest Attempt To Save EchoStar/DirecTV Deal Involves Cablevision

from the no-surprise-there dept

Just as Wired went to press saying that the EchoStar's likely failure to acquire DirecTV means that Charlie Ergen will get to battle Rupert Murdoch yet again, the Washington Post is reporting that Ergen has worked out a deal with Cablevision to buy some EchoStar assets, in order to manufacture a satellite TV competitor out of thin air. The Cablevision deal had been rumored for some time, and Cablevision had announced some incredibly weak plans to offer satellite TV (some rumors said they got backing from Murdoch...). It's still unclear if EchoStar will get approval, though. I still wonder, though, why the FCC and the Justice Department don't realize that satellite TV and cable TV are competitors. They keep saying that the combined EchoStar/DirecTV would lead to a monopoly... It doesn't. How many people do you know who have both satellite TV and cable TV? The two are clearly substitutes in the same market.

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  • identicon
    Oliver Wendell Jones, 28 Oct 2002 @ 10:34am

    Wrong monopoly

    The monopoly that the FTC is afraid of isn't satellite vs. cable, it's satellite vs. satellite.

    When DirecTV (Hughes) originally launched, you had to sign up with two different companies if you wanted basic channels AND premium channels. That way there were two 'different' satellite companies vying for your business. After Dish Network (Echostar) launched, DirecTV was able to combine the two 'different' companies into one big company.

    Right now if you want to sign up for small dish satellite service, you have two options, Dish Network or DirecTV. If the deal had gone through, you would have had only one choice - DishDirecNetworkTV - like or leave it. That would make them a monopoly, and that's not acceptable (to the government).

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 28 Oct 2002 @ 11:40am

      Re: Wrong monopoly

      I understand that's what the government thinks, but satellite isn't a market by itself. The services compete with cable TV. That's the market. It really doesn't matter if there's only one satellite TV provider if cable TV's offer an equivalent service.

      reply to this | link to this | view in chronology ]

      • identicon
        Prashant, 28 Oct 2002 @ 2:49pm

        Re: Wrong monopoly

        Mike.

        I think the fcc is more concerned about a monoply in markets where satellite is the only choice. Many rural areas have no cable service. But I don't know if that market is big enough to warrant killing the deals.

        reply to this | link to this | view in chronology ]

      • identicon
        Jeff, 28 Oct 2002 @ 9:19pm

        Re: Wrong monopoly

        Mike,

        While I sort of agree with you here, liken it to this, if ATT was the sole cable company out there, thats a monopoly, even if Satellite is a choice, its still a monopoly. It works the same way if you choose to go with Satellite you need a choice, and like the other poster said, there are areas where cable is not available, and simillarly areas or situations satellite is not a option.

        Jeff

        reply to this | link to this | view in chronology ]

        • icon
          Mike (profile), 28 Oct 2002 @ 10:13pm

          Re: Wrong monopoly

          Jeff,

          Thanks for the comment. I see where everyone is coming on this, but I don't agree... with the possible exception of the few areas where cable is not available.

          Here, let me explain. Based on the argument that everyone seems to be making, then a monopoly is all in the definition that some random person chooses for the market. I could say that the Burger King down the street from me has a monopoly on Burger Kings... even though there's a McDonald's across the street.

          That's not right. A market is defined by the products that a consumer decides between. People decide between McDonalds and Burger King. They decide between cable and satellite.

          Just to make the point even clearer... the fear on all this is that EchoStar will raise its prices. If that happens then fewer people will sign up for satellite, and, instead will sign up for digital cable - because most consumers see those two things as substitutable products... thus, meaning there is no "monopoly" on satellite (except in the regions where no cable is available).

          If someone has data on how large those regions are, I'd like to see it. That might convince me that the FCC is right in blocking the merger. Otherwise, I still think they're being silly.

          reply to this | link to this | view in chronology ]


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