Calls of Note Part 3

- Bear Stearns comments on Echostar Communications (NASDAQ:DISH) noting DISH has a strong day yesterday finishing at $32.52, up $1.89 or 6.17%. Firm believes that the stock performed well because of an article in the Los Angeles Times which mentioned that there was speculation at last week's Allen & Co.'s Sun Valley conference that "Murdoch was close to making a deal to buy Echostar Communications Corp."

Despite the article, and today's strong performance, firm maintain their view that a merger between DirecTV and Echostar would not gain regulatory approval. Firm's legal and regulatory checks in DC continue to suggest that key regulators do not believe that multichannel video competition has changed substantially since late 2002, when the original deal was rejected by the DOJ and the FCC. Neither cable nor the telcos have made meaningful inroads into rural areas, and the Internet is not yet capable of delivering the kind of multichannel video offering needed to compete directly with DBS.

Finally, they note that in 2002, the FCC commission, which included Kevin Martin (current FCC Chairmen), rejected the deal in a 5-0 vote. To change his original opinion, Martin would need to see substantive change in the marketplace before he would approve a newly-proposed merger. There seems to be little evidence of such change at this time. Additionally, the firm believes that it is very unlikely that Chairmen Adelstein and Copps would approve such a merger.

Maintains Underperform on DISH.

Notablecalls: Bear's call makes sense. Additionally, I know a couple of (real) smart hedgies that are leaning against DISH on yesterday's jump. Wouldn't want to bet against them.