The FCC unanimously moved to block the proposed $18 billion merger deal between GM’s Hughes unit and EchoStar Communications, arguing that the combination of the two satellite TV operators would be particularly hurtful for millions of Americans without access to cable television.
It was the first time the commission had blocked a major media merger since 1967.
GM, which already has contributed $2.2 billion to its $67 billion pension plan this year, said it was not counting on the Hughes deal to fund the pension, according to Reuters.
The company has generated $4.8 billion in cash from its automotive operations through the first six months of the year, and also has raised billions more through other means. This money is going toward the pension fund and retiree health care obligations, as well as other efforts to strengthen its balance sheet, GM said, according to Reuters. GM confirmed again that the company is not required to make an additional contribution to the plan until at least 2004.
However, the blow is not necessarily a fatal one for the deal, as GM, Hughes, and EchoStar said in a joint statement that they will work with the FCC to get approval for the deal.
GM’s U.S. pension fund lost 3 percent on its investment during the first six months of 2002. The plan, which covers more than 630,000 active and retired U.S. workers, began the year underfunded by $9 billion. And, according to an earnings conference call devoted to the pension issue earlier this year , GM said that depending on the pension fund returns, it might have to contribute, before taxes, between $6 billion to $12 billion to the plan through 2007.
Still, GM has successfully confronted larger pension gaps as recently as 1993, when the pension plan was underfunded by $18.5 billion. The automaker contributed more than $22 billion to the plan from 1993 to 1995.