harles F. Dolan may have lucked out.
Mr. Dolan, the chairman of Cablevision, could become the beneficiary of EchoStar's need to create a viable competitor if its $26 billion acquisition of DirecTV is going to pass muster with regulators.
EchoStar's plan to make "major revisions" to its merger proposal as it tries to salvage the acquisition before it is rejected by regulators means that it is finally embracing the idea that it cannot have a monopoly over the satellite television market, as originally envisioned.
To placate regulators, EchoStar needs to persuade them that it has a true competitor, most likely by creating that rival itself. EchoStar, which operates the Dish Network, may have to consider selling some of its spectrum to a third party — its new homegrown competitor — allowing it to use the EchoStar satellite network or even permitting its services to be resold under another brand, analysts said.
Enter Mr. Dolan and Cablevision.
Cablevision, the nation's seventh-largest cable television company, has recently proposed to officials at the Federal Communications Commission and the Justice Department that it be allowed to buy — or better yet, be given free — some of EchoStar's spectrum, which it would use to start a competing satellite service.
Cablevision has been planning to start a satellite service after it launches its own satellite, Rainbow 1, into orbit next March. Some industry analysts, however, have suggested that the service could fail as a national player and as a viable competitor to a combined EchoStar-Hughes without the addition of more spectrum. Some analysts contend that even with the additional spectrum of 17 frequencies that Cablevision has lobbied for, it will be hard pressed to create a true rival service, arguing that its satellite will be positioned at the wrong angle to reach consumers in cities in the Northwest like Seattle.
Since EchoStar said on Monday that it would revise its merger proposal, the News Corporation, controlled by Rupert Murdoch, has begun an aggressive whispering campaign to discredit Cablevision's plan, according to industry insiders. Of course, Mr. Murdoch has good reason to try to block any chance of EchoStar's acquisition of DirecTV: if it is blocked, he hopes to team up again with Liberty Media, controlled by John C. Malone, to make another attempt to buy DirecTV, after having lost the bidding war to EchoStar last year, according to executives briefed on his plans.
For its part, Cablevision contends that its proposal is viable and would create a legitimate national competitor. The company says it needs EchoStar's 17 frequencies if it is going to offer local programming nationwide and dismisses speculation that its satellite will not be able to reach consumers in the Northwest.
"It would add enormously to our capacity and make us a far more robust competitor than we would otherwise be," Mr. Dolan said. Still, "We're going ahead with or without the spectrum," he said.
It remains unclear how EchoStar would be affected financially if it were forced to sell — or give away — the 17 frequencies Cablevision has requested. EchoStar has reserved the 17 frequencies mostly for private business video transmission and international transmission, not for its commercial national TV service.
So far, EchoStar and Cablevision have held no discussions, waiting to take a cue from regulators about when to hold talks.
Of course, EchoStar is preparing a list of other alternatives, according to executives close to the company, to be presented to the Justice Department on Oct. 28 if the F.C.C. does not move to block the deal first.
EchoStar had hoped it would not have to fight so hard. It wanted regulators to define the television market as multichannel television systems, which includes both satellite and cable, rather than just satellite. If cable is included, EchoStar-Hughes would control only 18 percent of the national market.
