EchoStar throws the towel in, Hughes Passes "Go"

EchoStar Communications Corporation has abandoned its attempt to acquire Hughes Electronics Corporation for $18 billion, after fighting the U.S. Department of Justice and the Federal Communications Commission for months over the acquisition. Both the Department of Justice and the FCC were of the opinion that the merger of EchoStar and Hughes would have created a satellite monopoly in the subscription television market, and that prices for satellite television services would soar as a result of little competition, particularly in rural markets with little or no access to cable. Hughes operates DirecTV and EchoStar owns the Dish Network. The companies jointly announced that they were ending the proposed deal because it "could not be completed within the time allowed by the merger agreement."

Under the Hughes-EchoStar proposed merger, Hughes could abandon the deal after January 21, 2003 and collect a $600 million break-up fee, with EchoStar under an obligation to buy out Hughes' 81% ownership in satellite service provider, PanAmSat Corporation, for $2.7 billion. EchoStar agreed to pay the $600 million break-up fee early to Hughes in exchange for Hughes releasing EchoStar from the PanAmSat purchase.

Many DirecTV subscribers who did not care for Dish Network and were worried about the impact of this merger, and are happy with the announcement. Many current DirecTV subscribers feared policy changes that would effect such issues as equipment purchase, channel line ups, and HDTV support.

The growth of the HDTV market has helped both Dish Network and DirecTV, which currently are the major programming source in the US for HD content. Many subscribers of both DirecTV and Dish Network, hope that a by product of the merger being called off will be additions of HD content to both the Dish Network and DirecTV line ups. Neither Dish Network or DirecTV carry all of the available HD channels and this continues to be a sore sport with HD supporters of both networks.