Analyst: Carey Departure = DirecTV Sale

Eagan Says AT&T Likely Suitor

Mike Farrell -- Multichannel News, 6/1/2009 3:17:45 PM

The speculation surrounding DirecTV CEO Chase Carey's possible departure for News Corp. could be the first step toward an outright sale of the satellite giant, most likely to AT&T, Collins Stewart cable and satellite analyst Tom Eagan said in a research report Monday.
In a research note, Eagan said that Carey has done a stellar job at DirecTV -- the DBS leader outpaced analyst expectations for subscriber growth in the fourth quarter and first quarter. Couple that with recent moves by largest shareholder Liberty Media and the satellite giant's board of directors may be more open to a sale, the analyst wrote.
"Mr. Carey has fulfilled the most pressing corporate DirecTV imperatives: turn-around DirecTV; negotiate the [Liberty Entertainment] merger; and renew the NFL agreement," Eagan wrote. "The heavy lifting is done."
In May Liberty proposed a deal that would house its 54% interest in DirecTV, its interests in three regional sports networks and other assets in Liberty Entertainment. Liberty Entertainment would later be merged into DirecTV.
That deal is expected to close in the fourth quarter, and would simplify DirecTV's ownership, which would also facilitate a sale, Eagan speculated. Eagan added that he believes AT&T is a prime candidate for DirecTV because it is vulnerable to increased competition with cable operators after their planned rollout of DOCSIS 3.0 in 2010 and the expansion of HD channels.
Investors appeared to be cheered by the possibility of a deal. DirecTV shares were up 50 cents each (2.2%) to $23 per share while News Corp. shares rose 68 cents each (6.1%) to $11.91 per share in afternoon trading Monday.