News Corp. reaches $6.6 billion deal giving it control of DirecTV satellite network
Thursday, April 10th 2003, 12:00 am
By: News On 6
LOS ANGELES (AP) _ News Corp. has reached a deal to gain control of Hughes Electronics Corp. and its DirecTV service, giving Australian media magnate Rupert Murdoch a U.S. outlet for his global satellite television network.
The proposed $6.6 billion cash and stock deal would give News Corp. access to DirecTV's more than 11 million subscribers and conclude Murdoch's three-year effort to seize the largest satellite television provider in the United States.
Under terms of the deal announced Wednesday, News Corp. will acquire 34 percent of DirecTV parent Hughes Electronics, a subsidiary of General Motors Corp., by purchasing 19.9 percent of Hughes shares owned by GM. News Corp. also will offer to buy 14.1 percent of Hughes shares owned by the public.
News Corp. will pay about $14 per share, making the deal worth about $6.6 billion. The company will then transfer its interest in Hughes to its Fox Entertainment Group subsidiary, which includes the Fox News Channel.
The deal is subject to approval by federal regulators and GM stockholders.
Murdoch, whose News Corp. also owns several media entities; BSkyB, the pay-TV satellite broadcaster; and the Los Angeles Dodgers baseball team, said the deal will increase competition in the cable markets and provide better services to U.S. viewers.
``With Fox taking a significant interest in Hughes, we are forging what we believe will be the premier diversified entertainment company in America today, with leading assets in film, television broadcasting and production, cable programming, and now pay-TV distribution,'' said Murdoch, 72.
GM president and chief executive Rick Wagoner said his company ``is pleased to have reached an agreement with News Corp. that provides substantial value to our stockholders.''
In addition to DirecTV, Hughes also owns 81 percent equity of satellite operator PanAmSat and Hughes Network Systems, a broadband satellite network provider.
Murdoch pulled a long-standing offer for Hughes off the table in 2001 and rival satellite broadcaster EchoStar Communications, based in Littleton, Colo., then tried to buy it for $18.8 billion. Federal regulators late last year blocked a proposed Hughes-EchoStar merger because they felt it would harm competition.
Under the agreement, Murdoch would become chairman of Hughes and Chase Carey, who currently serves as an adviser to News Corp., would become president and chief executive officer of Hughes. The company would continue to be based in the Los Angeles suburb of El Segundo.
At their convention in Las Vegas, members of the National Association of Broadcasters gave the acquisition a generally positive response, saying it probably would encourage satellite operators to carry local stations. The trade group had opposed the Hughes-EchoStar merger because it would have reduced competition and pressure to carry local stations in smaller markets.