EchoStar Sues DirecTV, Thomson

A federal court in Denver hosted a DBS David vs. Goliath scene the first week of February, when EchoStar Communications Corporation filed an antitrust suit against its rival DirecTV and Thomson Consumer Electronics, charging them with conspiring to keep EchoStar's products out of electronics stores.

EchoStar claims that retailers have declined to carry its Dish Network products because DirecTV offers higher royalties to stores that sell DirecTV systems exclusively. The suit also alleges that Thomson, the parent company of RCA products, has informed retailers that they won't be allowed to sell RCA digital TVs, some of which have built-in DirecTV receivers, if they also sell Dish Network products. RCA digital television receivers are among the lowest-priced—and, therefore, among the most popular with consumers—of the new breed of TVs.

The campaign has hampered EchoStar's ability to compete in the free market, attorneys assert, adding that mass-market chains like Circuit City and Best Buy, under pressure from Thomson and DirecTV, have declined to carry Dish Network products. DirecTV is a unit of Hughes Electronics, which is in turn owned by General Motors, and owns 5% of Thomson Multimedia SA of France, the conglomerate largely owned by the French government. DirecTV, in other words, has enormous capital resources, as is reflected in its dominance of the Direct Broadcast Satellite market. DirecTV has approximately eight million subscribers.

EchoStar, a relatively under-funded competitor with only about three million subscribers, claims to have suffered damages "in the billions of dollars" because of the actions and policies of DirecTV and Thomson. "Dish Network has lost many sales, despite its fast growth, because it did not have access to the retailers that DirecTV paid to boycott Dish Network," the lawsuit charges.

Defendants' lawyers say the suit is without merit. Financial damages sought by EchoStar were not specified in early reports about the dispute.