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Murdoch wins DirecTV
By Geoff Hiscock, CNN Asia Business Editor
NEW YORK -- Global media titan Rupert Murdoch has achieved his long-term goal of access to the U.S. satellite TV industry, clinching a $6.6 bilion deal Wednesday for News Corp. to take control of DirecTV. News is buying General Motors' 19.9 percent stake in in Hughes Electronics Corp. the parent of DirecTV. It will also seek to buy a further 14.1 percent of Hughes from public shareholders and GM's pension plan. News will pay $14 for each Hughes share, or 22 percent above Hughes' closing price of $11.48 on Wednesday. Murdoch told a press conference in New York on Wednesday night that "three years of patient negotiations" had culminated in what was a win-win-win result for News, GM and Hughes. He said that for shareholders and customers, the deal was the start of a "bright future". DirecTV has 11.3 million subscribers in the United States. After the deal was announced in New York, News Corp. shares opened sharply lower in Australia on Thursday morning. They are down 7 percent to A$10.91 near midday. Murdoch's acquisition also puts the creation of a global satellite TV business within his grasp. News Corp already controls pay-TV operations in Europe, Asia, Australasia and Latin America. Those brands include BSkyB in the U.K., Star in Asia, Foxtel in Australia and Sky Italia in Italy. News plans to transfer its 34 percent stake in Hughes to its 81 percent-owned Fox Entertainment Group -- a step Murdoch said was logical because Fox housed U.S. content and distribution. The DirecTV deal is subject to shareholder and regulatory approval and is expected to close in late 2003 or early 2004. GM will receive about $3.1 billion in cash, with the remainder to be paid in News Corp. preferred American depositary receipts (ADRs). Carey as CEONews chairman and chief executive Rupert Murdoch will become chairman of Hughes, with News adviser Chase Carey as president and chief executive. Murdoch and his elder son Lachlan have both said in recent weeks that DirecTV was a "good fit" with their existing businesses, but they stressed that the price had to be right. John Malone's Liberty Media Corp., which already owns 18 percent of News Corp., also considered bidding for Hughes. But on March 28 it struck a deal with News giving it the option to buy $500 million in preferred News stock. That cleared the way for News to push ahead with its Hughes talks. The deal ends a two-year effort by GM to get out of the satellite TV business. GM chief executive Rick Wagoner told a press conference the transaction was a "very satisfactory" result. GM thought it had a deal in 2001 with rival satellite owner EchoStar Communications, which offered $30 billion for Hughes. But that was rejected by regulators in late 2002, leaving the way open for a renewed News bid. News Corp. shares closed down 66 cents at $27.22 on the New York Stock Exchange on Wednesday.
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