Ergen thriving even with satellite merger in doubt. (Media & Technology).

CHARLIE Ergen isn't a clubby kind of guy. He wasn't in Sun Valley, Idaho the other week, schmoozing with News Corp. Chairman Rupert Murdoch and other media moguls at Allen & Co.'s annual conference.

Ergen, the chairman and controlling shareholder of EchoStar Communications Corp., also hasn't endeared himself with Washington bureaucrats during a nine-month effort to win approval for the pending acquisition of El Segundo-based Hughes Electronics Corp.'s DirecTV, his satellite-television competitor.

But Ergen often wins by hanging tough. Twice, he has thwarted Murdoch's effort to enter the U.S. satellite business. And his stubborn refusal to buy software for on-screen program guides from Pasadena-based Gemstar TV Guide International Inc. has been vindicated by two courtroom victories in recent weeks.

Even if regulators block the proposed DirecTV merger, EchoStar is gaining market share in the interim. During the most recent 12-month period tracked by the Satellite Broadcasting and Communications Association, EchoStar added 1.47 million subscribers, compared with DirecTV's gain of 908,000.

"Ergen wins either way. He's tied up DirecTV and gotten all their strategies. There's nothing like picking the pockets of your closest competitor," says Scott Cleland, chief executive of the Precursor Group, a Washington research firm that monitors regulatory issues.

Together, EchoStar and DirecTY boast 18 million customers, or more than 90 percent of the satellite TV market. The two companies contend they must merge to compete against the larger cable TV industry.

There is skepticism about the merger's chances of approval, though, because many rural markets have no cable TV service. The combination of DirecTV and EchoStar would give some areas just one subscription TV provider instead of two.

"I've talked to a fair number of antitrust lawyers, and my understanding is that you may not sacrifice one market for the benefit of another," says Michael Goodman, a senior analyst with the Yankee Group, a market research firm in Boston.

Cleland says there's "not a chance" the merger will pass muster. "It's way over the line, in terms of antitrust law," the analyst contends.

But EchoStar and DirecTV counter they'll offer a nationwide pricing plan that would protect rural subscribers from being gouged in markets where the satellite TV company is the sole provider of subscription television. They say the benefits of the merger would vastly outweigh the loss of a second big satellite TV brand.

No one is saying how that argument is faring inside the Justice Department, where antitrust lawyers are scrutinizing the proposed merger, but the companies say they hope to have an answer by year-end.

Under the agreement with DirecTV, EchoStar must pay $600 million if the merger can't be completed. EchoStar would still be obligated to buy Hughes's 81 percent stake in commercial satellite company PanAmSat Corp. for $2.7 billion.

Hughes would emerge "debt-free, with a fully funded business plan," says George Jamison, a Hughes's vice president.

Presumably, Murdoch might be waiting in the wings. The News Corp. chief courted Hughes for more than a year before withdrawing in a huff on the day he expected a favorable vote from the board of General Motors, which controls Hughes.

With the cash flow from DirecTV's 10 million subscribers, Murdoch could have pursued his plan of forming a publicly traded subsidiary for his global satellite TV investments and some of his 42 percent stake in Gemstar TV Guide. The value of those assets has declined with News Corp.'s $4 billion writedown of the Gemstar investment in May.

Patent dispute

Gemstar, which holds hundreds of patents in the interactive television business, has had its own long-running feud with Ergen's company, which spilled into federal courts. EchoStar balked at paying Gemstar a $15 fee per set-top box to gain indemnity from patent infringement claims, among other things.

In the past month, EchoStar has scored two legal victories. In Asheville, N.C., U.S. District Court Judge Lacy H. Thornburg ruled that none of EchoStar's current products infringe on Gemstar patents cited in the lawsuit.

On June 21, an administrative judge for the U.S. International Trade Commission ruled that three Gemstar patents weren't violated by EchoStar or three other companies.

People seem to love or hate Ergen, who is "very opinionated. He can rub a lot of people the wrong way," the Yankee Group's Goodman says.