EchoStar offering $28.8 billion for Hughes Electronics

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NEW YORK (AP) EchoStar Communications Corp.'s top executive acknowledged Monday that the company's $28.8 billion unsolicited bid for satellite television rival Hughes Electronics Corp. is sure to generate intense scrutiny by federal antitrust regulators.

But a merger of the nation's two largest satellite television providers would likely be approved if the government considers cable television operators as competitors of the combined company, EchoStar chairman and chief executive Charles W. Ergen said.

''Cable rates are going up two or three times the rate of inflation,'' Ergen told reporters in a conference call. ''The only way that's going to stop is to have a strong satellite operator to compete with those folks.''

Hughes' DirecTV, with more than 10 million subscribers, is the nation's largest satellite-television broadcaster. EchoStar, based in the Denver suburb of Littleton, Colo., has nearly 6.1 million subscribers.

The combined company would be slightly larger than the country's largest cable operator, AT&T Broadband, which has 16 million subscribers. But it would rank a distant second if AT&T accepts one of a number of merger offers from other cable operators currently trying to buy the broadband division.

EchoStar announced its stock swap proposal Sunday, a month after General Motors Corp., Hughes' largest shareholder and corporate parent, said it was moving forward in talks to sell Hughes to Rupert Murdoch's News Corp. EchoStar would also assume $1.9 billion in debt.

Ergen said EchoStar had been in talks with GM about buying Hughes as recently as several months ago, but that hopes of a friendly merger fell apart several weeks ago.

''We were informed they were not enthusiastic about the deal,'' Ergen told reporters.

Analysts had mixed opinions on whether Ergen's argument about competition with the cable industry would resonate with government regulators.

''I believe that Ergen potentially has a valid argument, but no matter what, the regulators may see it a different way,'' said Peter Kreisky, a media industry consultant with Mercer Management Consulting in Boston.

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