ILS, based in McLean, Va., is a joint venture of Lockheed Martin [LMT] and two Russian companies, Khrunichev State Research and Production Space Center and RSC Energia of Moscow. ILS was formed to market and manage the missions for the Proton and Atlas vehicles.

The Department of Justice’s past rulings on media mergers suggests a rejection of the merger is more likely than its approval, said Karim Zia, a satellite analyst with Deutsche Banc Alex. Brown. Last week’s proposal by Luxembourg-based SES Global to become a competitor to a merged EchoStar- DirecTV is far from becoming reality and may not help the merger’s chances of winning approval, he added.

Rob Kaimowitz, a long-time satellite analyst who recently launched his own hedge fund, Bull Path Capital Management, said he believes the merger could be approved if EchoStar and DirecTV are willing to make concessions to win regulatory support. Potential restrictions on a merged company may allow Pegasus Communications Corp. [PGTV] to become a “much stronger” competitor in rural markets, he added.

In addition, the business model SES uses to push responsibility for marketing the service to the company’s programming partners differs from the successful formula EchoStar and DirecTV have pursued in the United States that leaves that important function to them, Zia said. The subscriber acquisition costs of $500 for each EchoStar and DirecTV subscriber would have to be borne by “someone” under the SES plan, he added.

The business model SES plans to rollout to provide satellite TV services in the United States was successful in Europe, but the company did not face two entrenched rivals the way it would in the U.S. market, Zia said.

Internet Capital Group (http://www.internetcapital.com) owns and builds Internet software companies that drive business productivity and reduce transaction costs between firms. Founded in 1996, ICG devotes its expertise and capital to maximizing the success of these platform companies that are delivering on-demand software and service applications to customers worldwide.

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