Murdoch Lobbyists Poised to Fight

News Corp. and EchoStar's battle over DirecTV is currently being waged in front of General Motors's board, but no matter who wins, the fight will soon come to Washington.

And once it does, lobbyists for News Corp. will be making the argument that having a direct broadcast satellite company that controls more than 90% of the market would harm competition. The notion, which competing lobbyists say News Corp. has already been advancing quietly at the federal agencies, on Capitol Hill, and in the press, strikes many in Washington as pure hubris-especially coming from a vehement free-marketer who just won a temporary waiver from the Federal Communications Commission to own two television stations and a newspaper in New York City.

"[News Corp. chairman Rupert] Murdoch is presenting himself as the aggrieved victim of monopolization," says public interest lawyer Andrew Jay Schwartzman, who thinks the public would be better served if EchoStar owned DirecTV. "The irony is not lost on a lot of people around Washington."

News Corp.'s chief in-house lobbyist Michael Regan did not return a call for comment.

It's clear that regulatory problems have weighed heavily on GM's board as they decide which offer to favor, and News Corp. has thus far successfully argued that merging the two largest broadcast satellite companies would be an antitrust nightmare. (DirecTV currently has about 10 million subscribers, and EchoStar has about 6 million.)

EchoStar, however, is fighting back. It hired lawyer David Boies, who represented the U.S. government's case against Microsoft, to advise them on antitrust questions and Echostar chairman and CEO Charles Ergen addressed the issue in his Aug. 5 letter to GM's board. "We have also given careful consideration to the regulatory approvals this transaction would require," Ergen wrote. "After extensive review by antitrust experts, including David Boies, we are confident we can obtain such approvals in a reasonable time frame."

At issue in the merger is a question that divides antitrust authorities: How to define the market for satellite television. If the market is defined as just satellite television (as News Corp. would like), one company with more than 90% control would obviously constitute a monopoly. But looking at the market in terms of all multichannel television providers (including cable), a combined EchoStar-DirecTV would only control 18% of the market, a little more than the largest cable provider, AT&T Broadband, already controls. And AT&T's cable division could get even larger: It is currently the target of a takeover by Comcast.

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