Regulators are reportedly preparing to block the merger of the US's two biggest satellite TV operators, news agency Bloomberg has reported.

The agency, quoting sources "familiar with" the matter, said Echostar Communications' $23bn purchase of Hughes Electronics faced rejection by watchdog the Federal Communications Commission.

A failure of the takeover could hand media tycoon Rupert Murdoch a fresh chance to merge Hughes' DirecTV business with his SkyGlobal network.

'Too soon to say'

But FCC declined to comment on the report.

And a spokesman for Hughes said it was premature to comment on the watchdog's decision.

"This is simply speculation," spokesman Richard Dore told Bloomberg.

"They're still collecting information."

An Echostar spokesman said the firm was continuing to work with federal officials assessing the merger.

"We believe the merger is good for consumers and should be approved based upon its merits," spokesman Marc Lumpkin said.

Decision soon?

DirecTV is the main satellite TV provider in the US with 10 million subscribers, while Echostar owns the second-ranked service, with 6.7 million viewers.

An FCC dossier being compiled on the merger reportedly opposes it on the grounds of preserving consumer choice.

The FCC's four commissioners are likely to vote this month on the staff recommendation to oppose the transaction, Bloomberg reported, citing people familiar with the matter.

The FCC's lawyers are believed to have concluded that the merger could lead to consumers having to shell out more money for pay-TV.

Federal competition watchdogs are also said to be preparing to ask the US Justice Department to oppose the merger.

They held meetings - normal in the case of big mergers - with Hughes executives on 24 September at which they said no decisions had been taken, a letter from the firm to its staff said.

Murdoch's ambitions

Charles James, the chief anti-trust lawyer at the Justice Department, told a Senate hearing last month that a tie up between Echostar and DirecTV would "at best" cut the number of players in the sector from three to two.

But Echostar claims that, without the merger, it would be unable to compete with cable TV providers such as AT&T.

Mr Murdoch pulled out of the competition for DirecTV last year, angered at the indecision of its ultimate parent firm General Motors (GM) after months of negotiations.

Mr Murdoch had hoped to merge DirecTV with the Sky Global network owned by his News Corp media empire, creating a worldwide platform to distribute its huge portfolio of TV shows and films.