Rupert's Death Star: The Media Baron's $1 Billion Deal with EchoStar Heats Up Satellite TV's Battle against Cable

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The media baron's $1 billion deal with EchoStar heats up satellite TV's battle against cable

LAST MONTH RUPERT MURDOCH'S Twentieth Century Fox studio rereleased "Star Wars," the intergalactic action-adventure film. And last week Murdoch did a little Darth Vader act of his own. Feet firmly planted on Earth, the space-age buccaneer detailed his brazen strategy to accelerate and escalate his long-planned attack on the U.S. cable industry. In a lightning $1 billion strike, Murdoch had acquired control of EchoStar, a fledgling satellite TV company, and combined it with his own yet-to-be-launched venture. The Murdoch mission: nothing less than supplanting Big Cable in America's living rooms with his 500 channels of programming beamed in from outer space. And he claimed to have a new killer weapon, something satellite TV has always lacked: technology that will let his service deliver hometown high-school sports scores, weather and news along with a blizzard of Hollywood movies and pro sports events.

The satellite business may finally be headed into orbit. For most of the evolution of the American television industry, satellite TV was no more than a blip on the screen. For almost two decades, cable and over-the-air broadcasters had the battle for the nation's 100 million TV homes largely to themselves. And what a fight it's been, with years of brutal and costly clashes stretching from the marketplace to the halls of every branch of the federal government. Along the way, cable has consolidated into a handful of mammoth companies, including Tele-Communications Inc., Time Warner and Comcast, which have wired America community by community, carving out local monopolies. And the most powerful broadcasters--NBC, CBS and ABC--have themselves been swallowed by corporate giants.

Meanwhile, direct-broadcast satellite TV, or DBS, seemed content to nibble on table scraps. As broadcast and cable pummeled each other, satellite dishes quietly began sprouting in the countryside and backwoods starting in 1980. Then, in 1994, the digital age arrived, ushering in a generation of small dishes and higher-quality service, including crystal-clear pictures and CD-quality sound. And cable rivals suddenly learned that DBS was no longer the industry's country bumpkin. …