Murdoch may be spoiling for fight against EchoStar deal: News Corp. lobbyists may try to quash $26B DirecTV merger

Cable World, Nov 26, 2001 by Erik Wemple

Just as Washington descended into its annual Thanksgiving lull, Rupert Murdoch's News Corp. appeared ready to sign up top lobbying firms in a campaign to kill the $25.8 billion pending merger of EchoStar Communications Corp. and DirecTV, according to a consumer advocate and a top lobbyist.

EchoStar prevailed in its quest to acquire the General Motors-owned satellite TV property in late October, after a disappointed Murdoch withdrew from the bidding. Ever since, analysts have speculated that Murdoch would use his significant financial resources to block the deal as it winds through Washington's regulatory approval channels. While News Corp. initially indicated in public statements it would not stand in the way of the EchoStar deal, the company appears to have since revised its view.

"Murdoch is lawyering up," says Andrew Jay Schwartzman, president of the Media Access Project, a Washington. D.C.-based consumer advocacy group that has closely followed the DirecTV deal and disapproves of the merger on anti-competitive grounds.

That assessment was seconded by a top lobbyist contacted by Cable World who, on condition of anonymity, said that News Corp. was on the verge of signing at least one lobbying firm to represent the company in its opposition to the merger.

News Corp. did not respond to a call from Cable World about its lobbying activities.

Media lobbyists in recent weeks have speculated over who might win contracts with News Corp. to highlight the various regulatory drawbacks of the EchoStarDirecTV merger, which must undergo review by antitrust authorities at the Justice Department as well as separate scrutiny by the Federal Communications Commission.

One prominent power broker said to be negotiating with News Corp. is Robert Pitofsky, the former chairman of the Federal Trade Commission who orchestrated the government's antitrust review of the AOL Time Warner merger. "There are obvious reasons why Murdoch would be talking with Pitofsky," says one industry lobbyist.

When asked about lobbying for Murdoch, Pitofsky would neither confirm nor deny his involvement. "That's not the sort of thing I can discuss. This is privileged information between lawyer and client. You may want to ask [News Corp.]," says the former FTC chairman, who now teaches law at the Georgetown University Law Center.

Another reported suitor for the News Corp. account, Bill Timmons Jr. of the prominent K Street lobbying firm Timmons & Co., hung up the phone when a reporter called to ask him about the matter. Receptionist Holly Thoden said that Timmons had to switch to another call.

Regardless of which firms end up with a piece of the News Corp. action, opponents of the deal appear to be moving more aggressively in assembling a Washington team than the merging companies themselves.

Thus far, EchoStar CEO Charlie Ergen has made two trips to Washington to talk up the deal among various power brokers in Congress and the relevant regulatory agencies. And Ergen has secured antitrust counsel from ace attorney David Boies, who assisted the Justice Department in its antitrust case against Microsoft and Al Gore in his pursuit of a Florida recount in last year's presidential election.

But according to congressional sources, the merger partners don't have many experienced hands ready to help shepherd the deal through the D.C. approval process. Former House Telecommunications Subcommittee Chairman Jack Fields (R-Texas) of Twenty-First Century Group Inc. is working on behalf of EchoStar, and prominent Washington law firm Verner Liipfert Bernard McPherson and Hand may swing in on behalf of longtime client DirecTV.

Verner Liipfert is ranked fourth among Washington lobbyists according to a recent report by the National Journal, and in late October the firm elevated Northern Ireland peace broker and former Senate Majority Leader George Mitchell to chairman. However, a source close to the firm insists it is not involved in the EchoStar-DirecTV merger deal "at this time." The source declined to comment whether Verner Liipfert expects to eventually play a role.

The thin inside-the-Beltway lineup is business as usual for EchoStar, a company that has shunned hired guns and instead has dispatched Ergen to press his case with Washington types. According to figures supplied by the Center for Responsive Politics, EchoStar spent a measly $60,000 on lobbying in 2000, a sum that falls in line with previous years: In 1997 and 1998, the company spent $9,000 and $32,000, respectively, on lobbying activities. The only aberration is 1999, when EchoStar shelled out $1.1 million, including $140,000 to the Washington law firm Patton Boggs, to guide the Satellite Home Viewer Improvement Act through Congress.

Skimping on lobbying outlays jibes with the corporate ethos set by Ergen, whose famous parsimony extends to ordering company executives to share hotel rooms on travel outings. In the early stages of the merger deal, Ergen took the lobbying offensive into his own hands, personally preaching the benefits of the combination to officials at both agencies and on Capitol Hill. It's a familiar role for EchoStar's CEO.