DBS provider Echostar is in the process of acquiring General Motors' Hughes Electronic division and its DirecTV satellite service for $25.8 billion. The goal of the merged company is to provide competition for cable television by delivering video entertainment and broadband data services, especially to underserved rural markets. After the merger, Hughes would maintain a majority shareholder position while Echostar would gain management control of the new company. The combined company will use the EchoStar name and adopt the DIRECTV brand for its services and related products.
Credit Suisse First Boston and Deutsche Banc AG provided $5.5 billion of the financing needed for the acquisition. Additional funding came from the personal funds of Echostar Communications' founder, chairman and CEO Charlie Ergen.
Echostar is awaiting approval for the deal from regulators over the next 10 to 12 months. The FCC has established an intra-agency team to review the proposed merger, led by Kenneth Ferree, head of the FCC's Cable Services Bureau.
The merger between Echostar and DirecTV would create the second-largest pay television platform in the nation, with more than 16.7 million subscribers, and the potential to gain eight million more over five years. The new company would control between 80 and 90 percent of the DBS market.
