Companies Have 30 Days to Amend Plan

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CHICAGO (AdAge.com) -- The proposed $16 billion merger of satellite TV providers Dish Network and DirecTV was rejected today by the Federal Communications Commission, potentially opening the door for Rupert Murdoch's News Corp. to revive its bid for DirecTV.

18 million households
Dish, controlled by EchoStar Communications Corp., and DirecTV, controlled by General Motors Corp. unit Hughes Electronics Corp., together serve about 18 million U.S. subscriber households. Their merger would have created the nation's largest satellite TV company, and, said FCC Chairman Michael Powell, "would eliminate an existing viable competitor in every market in the country."

In Advertising Age's ranking of U.S. media companies this year, DirecTV was ranked No. 10 and Dish was ranked No. 16 based on 2001 revenue.

Price wars
Subscription sales for Dish and DirecTV have picked up steam as they aggressively promoted lower prices in head-to-head competition with local cable TV systems. In rural markets not served by cable, they are the only pay-TV services available.

While the unanimous FCC decision seemed a likely deal-killer, the commission allowed EchoStar and Hughes 30 days to file an amended merger plan. The companies said they would continue to seek FCC approval for the merger.

News Corp.
News Corp., a major provider of pay-TV services outside the U.S., had earlier fought, and lost, a bidding war with EchoStar for GM's DirecTV, which would have made News Corp. a major player in the U.S. pay-TV market.

In the days prior to today's FCC ruling, EchoStar and Hughes had proposed undisclosed changes to their original proposal in hopes of winning approval from U.S. Justice Department antitrust officials, who also would have had to OK the deal.

Interpublic Group of Cos.' Deutsch, Los Angeles, handles DirecTV creative. Media planning is at Publicis Groupe's MediaVest, Los Angeles, and media buying is handled by Interpublic's GM Mediaworks, Warren, Mich.

Havas' Euro RSCG MVBMS, New York, handles Dish.

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