Murdoch: Cablevision's DBS Play `Isn't Viable'
By Mike Farrell -- Multichannel News, 11/21/2002 12:30:00 PM
News Corp. chairman Rupert Murdoch said his company is still in negotiations regarding its "put" option to Cablevision Systems Corp., but he added that there is no clear path to an outcome yet.
Murdoch, speaking at Fox Entertainment Group's annual meeting in New York Thursday, said News Corp. is in active talks with Cablevision, but no deal has been hammered out yet.
News Corp. owns 85 percent of Fox Entertainment, and Murdoch is also chairman of Fox.
"We're talking with them," Murdoch told reporters. "We think there are ways that we can arrange our relative assets better. But we're not breaking our hearts over it. If they stay the way they are, that's good, too."
News Corp. has the right to "put" its 40 percent interest in Cablevision's Rainbow Media Corp. regional sports networks Dec. 18. That stake has been valued by some analysts at about $1 billion.
Later, News Corp. president Peter Chernin chimed in, adding that the company has three options regarding the put: maintain the current relationship with Cablevision, put its stake in the channels back to the MSO, or arrange an asset swap.
Most analysts expect the latter to happen, specifically through an exchange of News Corp.'s interest in Madison Square Garden, its professional sports teams and Radio City Music Hall for full control of the Fox Sports Net channels outside of the New York metropolitan area.
"We have a good relationship with [Cablevision]," Chernin said. "We're in discussions right now."
Later, Murdoch said News Corp. had been asked to be a partner in Cablevision's fledgling direct-broadcast satellite venture, but it turned the MSO down.
"We have been invited to be a partner with Cablevision and declined," Murdoch said. "We don't think [the DBS venture] is viable. We don't think they have sufficient spectrum to compete. With 20 million people taking satellite TV already, to come in at this stage would take many billions of dollars."
But Murdoch was cautious when asked about the possibility that News Corp. would make a run at DirecTV Inc., the satellite-television arm of Hughes Electronics Corp.
"The idea of us having a national distribution platform is strategically very sound," Murdoch said, "but it's not essential. At the right time and the right price, it could be interesting."
Speculation has been that Murdoch could team up with Liberty Media Corp. chairman John Malone to acquire DirecTV. Liberty has also expressed an interest in going after the DBS giant alone.
Murdoch said he has had no discussions with Malone concerning DirecTV, but he and Malone "talk every week or two. We have a close relationship between the companies and between the two sets of executives. Hughes hasn't even been put on the block yet."
Murdoch also put in his two cents on talk that The Walt Disney Co. would merge the news operations of its ABC broadcasting network with Cable News Network in an effort to cut costs. He said such a combination would save money but create a "two-headed monster."
"I think that each would lose their uniqueness," he added. "It commoditizes their product."
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