Suit May Block DirecTV Deal

Unimpressed by some last-minute concessions, state and federal antitrust officials are expected today to file suit to block the proposed marriage between EchoStar Communications Corp. and its satellite-TV rival Hughes Electronics Corp., according to sources close to the deal.

Executives from DirecTV, which is owned by Hughes, and EchoStar met Monday with Assistant U.S. Atty. Charles James and offered to give up some of their satellite frequencies to New York-based Cablevision Systems Corp., which wants to launch a rival satellite-TV service.

But antitrust officials, including state representatives from Missouri, New York and Connecticut, continue to believe the EchoStar-DirecTV merger would reduce competition and harm consumers. “They got a very bad reception from both Justice [Department] and the states,” according to a source familiar with the meeting. “States considered it a nonstarter and the Feds were highly skeptical.”

James skipped a follow-up meeting Tuesday with Cablevision officials, who attempted to show how their new service might restore competition in the satellite-TV market after the merger, a source said. “We remain optimistic that the government will accept the proposed solution, which addresses every concern relating to competition,” a Cablevision spokesman said Wednesday.

The Federal Communications Commission blocked the merger this month, leaving most analysts to conclude that the deal is not salvageable.

An EchoStar spokesman declined to comment Wednesday.

Shares of Littleton, Colo.-based EchoStar fell 17 cents to $19.82 on Nasdaq. Shares of El Segundo-based Hughes, a unit of General Motors Corp., dropped 25 cents to $9.77 on the New York Stock Exchange.