Littleton, Colo. - EchoStar Communications and Hughes Electronics called off their proposed merger yesterday citing that the deal could not be completed within the time allotted by the merger agreement.
In a joint statement EchoStar and Hughes blamed several regulatory issues for the deal killing delay. Primarily, that the Department of Justice, 23 states and the District of Columbia and Puerto Rico took action to block the merger. Another factor mentioned is the FCC's decision to send the merger application to a hearing.
The original merger agreement states that if the deal was not consummated EchoStar would have to pay Hughes $600 million in cash and buy PanAmSat from Hughes. However, EchoStar was relieved from the latter obligation and Hughes will retain its 81 percent stake in PanAmSat.
'We are appreciative of all the support we received and the opportunity to present the merger proposal to regulators. Obviously, we are disappointed in the final outcome. However, EchoStar will continue to seek alternative, innovative ways to provide competition to the rapidly consolidating cable industry and to provide more choices for all consumers,' said Charles Ergen, EchoStar Chairman and CEO.
'We continue to believe that the proposed merger would have been a victory for consumers nationwide, and for our shareholders. We worked hard on it to get the required regulatory approval and are disappointed that we were not able to complete the merger,' said Jack Shaw, Hughes' president and CEO.
One day after the merger was ended DirecTV solidified its competitive advantage over EchoStar by renewing its exclusive carriage agreement with the NFL for the NFL Sunday Ticket package. The deal runs for five years.