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EchoStar Communications Corporation is reeling in the wake of its recent failure to win approval for its proposed acquisition of competitor DirecTV. The Federal Communications Commission and the US Justice Department have both blocked the $18 billion merger. A trial over the issue is expected early next year.

On November 14, the company reported a $168 million loss for the third quarter, a steep decline compared to the $3.1 million profit posted for the same period last year. The loss included a $134 million charge tied to a $1.5 billion investment in EchoStar by Vivendi Universal and $40 million lost in unrealized investments. The posted loss would have been even greater had EchoStar not written off $36 million in development costs for set-top boxes.

Despite the losses, the Littleton, CO–based direct broadcast satellite service reported 320,000 new subscribers added during the third quarter, with revenue rising to $1.2 billion, an increase of 20% over the same period last year, and 50% more than DirecTV reported for the recent third quarter. EchoStar spent $413 per subscriber during the most recent period, an increase from the $392 spent per subscriber during the third quarter of 2001. Total losses for the first nine months of 2002 reached $228 million, against $173 million lost in the first nine months of the previous year.

EchoStar chairman Charlie Ergen has hinted that his company may be forced to raise its rates if the last-ditch effort to acquire DirecTV falls through. Broadcasting & Cable's John Eggerton reported November 15 that Ergen believes EchoStar is underpriced, and predicted across-the-board rate increases for satellite TV now that the Comcast-AT&T merger is a reality.

"It won't be bad for us," he told Eggerton, "just for consumers." Frills likely to be eliminated are promotional gimmicks such as three free months for new subscribers. EchoStar has approximately 7.78 million subscribers, with DirecTV claiming about 11 million.