EchoStar's Ergen ties merger bid to new competition. (Media & Technology).

Now we have two corporate titans attempting "Hail Mary" plays as the clock ticks on a proposal to merge the nation's two dominant satellite-TV companies.

Charlie Ergen, chairman of EchoStar Communications Corp., made a last-ditch move to salvage his deal to acquire rival Hughes Electronics Corp., hoping to clear regulators' concerns about concentrated ownership.

From the sidelines, Cablevision Systems Corp. Chairman Charles Dolan hurled a surprise proposal to take 17 satellite transponders from EchoStar to launch a competing national service.

Ergen asked the Federal Communications Commission to postpone action until he submits a revised plan to the Justice Department later this month. But the FCC voted to deny approval of the merger, contending it's not in the public interest.

Time out

The FCC noted that EchoStar and El Segundo-based Hughes could still argue their case at a "full evidentiary hearing" before an administrative law judge. The companies will have 30 days to amend their FCC application or seek a delay for the hearing.

EchoStar and Hughes' DirecTV service serve more than 90 percent of the nation's satellite-TV customers. Ergen has contended that the two companies must merge to compete successfully with the larger cable TV industry.

The EchoStar chairman told an industry conference he wants to preserve the merger's benefits, but will propose structural changes to permit new entrants into the satellite TV business.

At 75, Chuck Dolan might seem an unlikely satellite contender. He's a cable-TV pioneer who helped wire Manhattan and invented Home Box Office before founding Cablevision Systems in 1973. The company has about 3 million cable TV subscribers in the greater New York area.

But Cablevision was a partner in a satellite venture with Hughes, News Corp. and General Electric Co.'s NBC that ended in 1991. In 1996, a Cablevision subsidiary formed a joint venture with a unit of Loral Space and Communications Ltd. to develop a Direct Broadcast Satellite or "DBS" service.

Over EchoStar's objections, the joint venture--named R/L DBS Co.--won a three-year extension from the FCC in late 2000 to develop its service. So far, Cablevision has spent about $280 million on the project.

Funding gap

In March, Cablevision acquired Loral's 50 percent stake, assuming full control. Service must begin by December 2003 or the venture will risk losing its license. Analysts have been leery of the DBS undertaking because Cablevision is heavily in debt and is so late to the satellite market. R/L DBS also lacks sufficient transponders to transmit programming to the entire nation.

Merrill Lynch & Co. analyst Jessica Reif Cohen estimates that Cablevision faces a funding gap of $408 million in 2003 unless it sells assets or uses funds from programming subsidiary Rainbow Media. She's dismayed by Cablevision's pitch to gain spectrum from EchoStar as a condition of any merger.

The notion of two mavericks like Ergen and Dolan working in tandem is enough to send shivers through investors and more conventional players in the cable and satellite ranks. But judging from the FCC vote, it may be too late for Ergen to bring in Dolan. Meantime, Hughes may get a fresh offer from Rupert Murdoch's News Corp., which bid unsuccessfully last year.

Still, EchoStar is viewed on Wall Street as a winner because the company has gained valuable knowledge of DirecTV's business in the 12 months since the merger was announced.