Just like the AOL Time Warner mega-merger, profits with digital and interactive programming are driving the merger announcement between direct broadcast satellite providers EchoStar and DIRECTV.

The path to those riches lies in whether the companies convince federal regulators that by providing advanced satellite broadband services to underserved rural pockets of the United States, they could help close the digital divide between city and country populations.

In a deal valued at about $26 billion, General Motors announced it would spin-off its Hughes Electronics division, which owns DBS company DIRECTV, and merge it with EchoStar Communications.

If the merger passes muster with the slew of regulators who would scrutinize it for anti-trust issues, the new company would be the second-largest pay television platform in the nation with more than 16.7 million subscribers and control of between 80 and over 90 percent of the DBS market.

Armed with a promise of offering broadband and advanced digital media services to underserved rural markets, at potentially lower costs, the merged company could present serious competition to cable and regional bell companies' ambitions to offer broadband and digital media entertainment to their subscribers.

Given the federal government's often-stated concern over how to address the "digital divide" between city and country populations, some analysts think the deal could eventually pass federal scrutiny.

Indeed, the landmark 1996 Telecommunications Act, which ushered in the era of mega-media mergers, calls for the Federal Communications Commission to "encourage the deployment on a reasonable and timely basis advanced telecommunications capability to all Americans."

The General Accounting Office has published a number of studies that show broadband access, either over a digital subscriber line or cable modem, is more available in metro markets than rural areas.

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But the merger faces many, many months of convincing, not to mention a powerful cable and telecommunications lobby.

Hughes is one of the largest providers of digital television entertainment and broadband services through its satellite-based networks and through DIRECTV has just over 10 million customers.

The Denver-based EchoStar, through its DISH network, provides direct broadcast satellite tv services, digital video and audio programming to about 6.43 million customers. The combined company intends to use the EchoStar name and adopt the DIRECTV brand for its services and related products.

At an analyst conference in New York Monday to discuss the announcement, Charles Ergen, the chairman of EchoStar, said he was confident that any regulatory concerns would eventually be overcome.

"This is a good deal for consumers, especially consumers in rural areas," he said.

Ergen reminded the audience that the government supported the creation of satellite broadcasting systems over 20 years ago as a way to offer competition to fast-growing cable providers and offer cable-like programming to rural areas where cable was unavailable.

"I think we could finally see that vision come to fruition" and really have a competitive broadcasting marketplace, Ergen said of the merger.

Still, as financial markets, regulators, analysts and anyone connected with the broadcasting industry picked over the multi-faceted announcement, plenty of questions and obstacles loomed large.

For example, by merging their operations, the two companies could effectively control all of the DBS operations in rural markets. Officials of the companies involved said they had pledged no price increases to customers, even as they upgrade their facilities to offer more digital services.

"If this wasn't good for consumers," added Ergen, "then it wouldn't make sense."

It certainly made sense to Rupert Murdoch of News Corporation, which had made an offer of about $22.5 billion for DIRECTV, but lost out to EchoStar's bid.

"This merger would be a heck of a challenge to cable providers," added Richard Doherty, head of research at consulting firm The Envisoneering Group and a well-known expert on cable and broadcasting industry.

It would also in his view force cable and regional phone companies to get even more aggressive with their respective efforts to roll out broadband over cable and digital subscriber lines, especially outside metro markets.

And if pending anti-competitive lawsuits between EchoStar and DIRECTV are dropped, (which appeared likely during Monday's analyst conference), then the FCC might not have as many concerns in the deal, he added.

But more than anything, the deal "ups the ante for cable to compete more directly with satellite," he added, and it seems to fit with the FCC's mission statement.

As cable systems struggle to control their costs of upgrading set-top boxes for more digital video services, the two DBS providers in this case have a chance to combine their redundant systems and cut a big chunk of operating costs out of the systems, Doherty added.

It's one reason the two companies are touting their "synergies" in the deal: It would introduce more competition and drive prices down for consumers, something regulators look for in mergers.

Plus, added Doherty, Ergen has publicly stated that he wants to cut the monthly DBS subscription costs to about $30.

The transaction needs about $5.5 billion of total financing. While it goes to the capital markets on the funding, EchoStar said it had arranged a $2.75 billion bridge loan from Deutsche Bank and a bridge loan of that amount from General Motors.

Based on Friday's closing price of EchoStar common stock at $25.26, the merger deal values certain GM shares at $18.44 per share, which is about a 20 percent premium, the companies said.