Communication
DirecTV and DISH Network Merger by Gary Davis
[Aug 25, 2007]
It was in October 2001 that General Motors Hughes (Parent company of Direct TV) and EchoStar Communications Corp., trader of Dish Network agreed to a merger. The new company would have improved the services for satellite TV clients by adding many HDTV channels and local channels would then be available to all satellite TV viewers.
However, the US Department of Justice blocked the merger.
Why did they do that?
The merger would create a monopoly position
When merged the new company would serve all of the United States without any competition. As we all know, competition spurs progress and a merger would basically result in less progress. At the present time about 25 to 35 million homes do not have access to cable TV services. Those people have the choice between 2 satellite TV companies. The merger would reduce this to just 1 company, which clearly is a monopoly position that is not allowed. Even in areas with cable TV the merger would result in just 2 providers, of which each has a monopoly on its own technology. Further, EchoStar claimed that the merger was needed to be able to compete against the cable TV Giants. However, satellite TV was growing very fast while cable TV was loosing clients. Out of every 3 new cable/satellite TV clients, 2 would go for satellite TV.