The Primestar Acquisition of the News Corp./MCI Direct Broadcast Satellite Assets

The Primestar Acquisition of the News Corp./MCI Direct Broadcast Satellite Assets 194 DANIEL L. RUBINFELD While significant in its own right, the Primestar acquisition provides an inter- esting window into the Antitrust Division perspective on a case involving complex horizontal and vertical questions. It also raises two intriguing, important conceptual and empirical issues that the antitrust agencies are likely to face again in the future. The first conceptual issue involves unilateral effects and potential competition. In a “typical” unilateral effects case one’s concern is whether the merging parties will price the acquired products as competitively as the original owners would have priced those products had the merger not taken place. In the acquisition in question the satellite asset has yet to be put into service. Consequently, the issue is whether Primestar would utilize its acquired assets as competitively as would the firm that would otherwise have acquired those assets. In sum, potential competition and unilateral effects issues are intertwined, so that a traditional unilateral effects case has been replaced by a “potential competition – unilateral effects” case. The second issue involves corporate governance. Had the proposed acquisition been consummated as initially planned, the five cable owners of Primestar would have had substantial board representation and, if voting in concert, a Review of Industrial Organization Springer Journals

The Primestar Acquisition of the News Corp./MCI Direct Broadcast Satellite Assets

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Kluwer Academic Publishers
Copyright © 2000 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
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