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Murdoch 'close to DirecTV deal'
NEW YORK (Reuters) -- Rupert Murdoch is poised to finally crack the U.S. satellite television market with a deal to acquire a controlling stake in Hughes Electronics Corp. and its industry-leading DirecTV business for about $6.8 billion, according to people close to the situation. The two sides were negotiating final details late Tuesday night and an announcement could be made as early as Wednesday, these people said. However, they cautioned that last-minute wrangling could push an announcement back to later in the week and talks could still break down. Under the terms of the deal, Murdoch's News Corp. would buy the 20 percent of Hughes owned by General Motors Corp. for about $14 a share -- a 22 percent premium over Hughes' $11.50 closing price on Tuesday -- and would offer to buy another 15 percent for the same price from the company's public shareholders. A 35 percent stake in Hughes would cost $6.76 billion in all, based on Hughes' 1.38 billion outstanding shares. GM would receive mostly cash and the public shareholders a higher ratio of shares to cash, the sources said. GM would spin off Hughes, currently a tracking stock tied to GM's shares, into a new company in which News Corp. would be the largest single shareholder. News Corp. would have operational control of the new entity, but not voting control. Murdoch had been negotiating for a majority of the board of the new company, but is likely to wind up with just a large minority, the sources said. GM, Hughes and News Corp. officials declined to comment. Late last month, News Corp. struck a deal with a major shareholder, John Malone's Liberty Media Corp., for Liberty to buy up to $500 million in News shares over the next six months. That agreement was seen as an indication that Malone was prepared to back Murdoch's bid for DirecTV. Two decadesIt is two decades since Murdoch first tried to enter the U.S. satellite TV business in 1983 with a venture called Skyband, which never took off. DirecTV's 11.3 million U.S. subscribers, the most in the country, would complement News Corp.'s European, Asian and Latin American satellite services. It also would end GM's attempts for more than two years to exit the business and provide the auto maker with money for its underfunded pension plan. Rival satellite owner EchoStar Communications Corp. edged out Murdoch in 2001 when it reached a $30 billion deal with Hughes. Regulatory opposition quashed the deal a year later, leaving GM to auction the unit again. News Corp. already owns a string of satellite businesses across the world, including BSkyB in the UK, Stream in Italy, SkyTel in Latin America, Star TV in Asia and Foxtel in Australia. For News Corp., the U.S. satellite market would provide a huge platform to distribute the news and sports channels it owns and could give Murdoch leverage against cable operators that carry the networks. Hughes also owns DirecTV Latin America, which is operating under bankruptcy protection, satellite high-speed Internet provider Hughes Network Systems and an 81 percent stake in satellite operator PanAmSat Corp. News Corp. shares in Sydney closed 0.51 percent higher at A$11.73 on Wednesday. The broader Australian market was down 0.95 percent. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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