News Still Eyeing DBS
By Monica Hogan -- Multichannel News, 3/21/2001 12:30:00 PM
News Corp. is still in 'ongoing talks' with both U.S. direct-broadcast satellite companies, DirecTV Inc. and EchoStar Communications Corp., a News spokesman said Wednesday amid rampant speculation over possible DBS mergers.
The talks to merge DirecTV into the News SkyGlobal assets are being held on two fronts, both with DirecTV parent Hughes Electronics Corp. and with Hughes parent General Motors Corp., the spokesman said.
According to published reports, News chairman Rupert Murdoch has requested a face-to-face meeting with the GM board to make his pitch for the DBS company.
UBS Warburg LLC analyst Tom Eagan said he expects to hear an announcement on a deal one way or the other within the next two weeks, adding that a deal between News and GM makes the most sense.
A News deal would value Hughes at about $40 billion, Eagan believes, well above what the company is trading at publicly today. Share prices for Hughes stock have fallen dramatically in the past few weeks.
Hughes is reportedly looking for alternatives to the News deal, such as financing a spinoff from GM on its own. But Eagan said doing so would saddle Hughes with too much debt.
A GM spokeswoman would not say whether a meeting with Murdoch had been scheduled, and she would not even confirm that GM had been in talks with News. She also could neither confirm nor deny that GM has been in talks with EchoStar about a possible merger with DirecTV.
'We are still very much involved in a process to identify which strategic option available to us is the one we'll pursue,' she said, adding, 'One option is to do nothing.'
The challenge for GM is to find a deal that is advantageous to its different classes of shareholders. Also, GM does not want a transaction that could in any way hurt its credit rating, the spokeswoman said.
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