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The completion of a proposed $26 billion acquisition of DirecTV's parent company Hughes Electronics by EchoStar Communications Corporation appeared in doubt after a week of intense scrutiny by federal lawmakers.

On Monday, December 3, EchoStar, Hughes, and Hughes' corporate overlord General Motors presented petitions in Washington hoping to win approval for the merger, which would create a single monolithic direct broadcast satellite (DBS) service providing signals to communities throughout North America.

The resulting enterprise would be a television provider as big as many large cable companies—the only alternative to cable for urban dwellers and the only choice for rural citizens. That possibility has concerned some consumer advocates, who point out that with two satellite services, rural viewers have at least the semblance of choice. They also claim, with some justification, that eliminating competition in the sky could eliminate any control over subscription fees.

The satellite services have responded to this argument with the claim that a merged entity would provide more channels of television and also offer rural communities their only chance at high-speed Internet connections for many years to come. "The proposed merger may provide the only opportunity for rural consumers to have an affordable high-speed Internet access option in the foreseeable future," the companies stated in a position paper circulated to lawmakers and officials of the Federal Communications Commission. "Cable threatens to extend its market dominance of the video market to the high-speed Internet access market as well," they explained.

The possibility of creating a "monopoly in the sky" appeared to be a serious concern for members of the House Judiciary Committee, whose weeklong inquiry at times looked like an all-star game played by Beltway heavy hitters. Congressmen heard arguments against the merger from former Federal Trade Commission chairman Robert Pitofsky, whose law firm represents Pegasus Communications Corporation, a Bala Cynwyd, PA–based company that markets DirecTV services in many rural communities. Pegasus could be forced out of business if the merger goes through. Pitofsky's firm also represents the National Association of Broadcasters trade group, a long-time adversary of the satellite industry. The merger is further opposed by Rupert Murdoch's News Corporation, which abandoned its bid to acquire DirecTV just a few days before General Motors shareholders voted to approve the sale to EchoStar. News Corp. is opposing the deal because it fears a combined EchoStar/DirecTV would wield "undue influence over programming."

EchoStar's team features Greg Rohde, the Clinton era's chief of the National Telecommunications and Information Administration; Jack Fields, who once headed the House Telecommunications Subcommittee; Nobel prize winner Joseph Stiglitz; and Princeton University antitrust expert Robert Willig. General Motors Corporation's strange bedfellows include the Reagan Administration's chief of staff Ken Duberstein and Bill Clinton's former deputy chief of staff Steve Ricchetti. Senate Commerce Committee head Ernest Hollings (D-SC), who won recent notoriety for his support of a Disney-backed anti-piracy bill that bears his name, has already expressed his opposition to the DBS merger.

The philosophical question is whether satellite television is an industry unto itself or simply a competitor to cable. EchoStar chief Charlie Ergen is trying mightily to convince lawmakers that a DBS merger is in the country's best interests because it would provide "real competition to cable." The national Consumers Union has thrown tentative support behind the merger for this reason. Ergen has promised that if the merger goes through, the resulting company would deliver broadband service to rural areas and beam local television stations into twice as many markets, all at prices determined by the most competitive rates offered in urban areas where cable is strongest.

Pitofksy, the former FTC head, has argued that approving the merger would be a "serious departure from antitrust precedent." In arguing for the merger, Rep. Rick Boucher (D-VA) has stated that he feels it is best for television viewers in rural areas, such as in his home district of southwest Virginia. In addition to Congressional and Senate inquires, the merger must be reviewed by the FCC and the US Justice Department.