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PrimeStar responds to DOJ
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June 17, 1998: 5:15 p.m. ET
Satellite broadcaster wants court to drop complaint blocking consolidation
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NEW YORK (CNNfn) - PrimeStar Inc., the nation's second-largest provider of direct broadcast satellite (DBS) television, filed Wednesday to dismiss the Justice Department's lawsuit that seeks to block its $1.1-billion acquisition of the satellite assets of News Corp. and MCI Communications Corp.
The action came in response to the civil complaint filed by federal regulators on May 12 in U.S. District Court, District of Columbia.
"The proposed transaction ... will result in significant pro-competitive efficiencies," PrimeStar said in its filing.
"These efficiences, which have not been properly considered by plaintiff, outweigh any anti-competitive effect of the proposed transaction," the company said.
Other parties named in the suit filed similar responses.
However the Englewood, Colo.-based company stopped short of confirming that all parties would agree to revise the terms of the sale in order to satisfy regulatory concern.
"If they can come up with something that is satisfactory, we'll present it to the DOJ. If they don't, well see them in court," said Joe Sims, partner at Jones Day Reavis & Pogue, which represents one of the owners of PrimeStar.
Power Play?
News Corp. and MCI Communications Corp. agreed on June 11, 1997, to sell their satellite assets to PrimeStar for $1.1 billion. It indicated the exit of Rupert Murdoch, the News Corp. chairman, from head-to-head competition with cable operators. MCI originally acquired the satellite frequency for $682.5 million through an Federal Communications Commission auction in January 1996.
But the federal government last month objected to the deal, contending the sale would shift power over the airwaves to an entity that is controlled by the nation's five largest cable operators.
Among the owners of PrimeStar are Tele-Communications Inc. (TCOMA); MediaOne Group (formerly known as U.S. West Media Group) (UMG); Cox Communications Inc. (COX); Comcast Corp. (CMCSK); and Time Warner Inc. (TWX), which is the parent of CNNfn.
The sixth owner, General Electric Co. (GE), is the only concern that doesn't compete directly with the satellite broadcaster.
The assets represent "the only remaining high-power orbital satellite slot capable of distributing a nationwide package of video programming competitive with that offered by cable," the Justice Department argued in its complaint.
The five cable giants that control PrimeStar serve about 60 percent of all cable subscribers in the country, the department contended.
But Wall Street has speculated that shifting ownership into a non-cable entity such as GE, which is PrimeStar's satellite provider, or Loral Space & Communications Ltd. could satisfy federal regulators..
-- by staff writer Robert Liu
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