DBS Firms Shape Up As Merger Targets


News Corp. last week denied speculation that it is in talks
to take over General Motors Corp. to get to its Hughes Electronics Corp. assets.

But some industry analysts believe direct-broadcast
satellite providers DirecTV Inc. and EchoStar Communications Corp. are high among
companies likely in play for media mergers or acquisitions.

"It makes sense that Hughes is a target of acquisition
play," Tellus Ventures Associates Steve Blum said. "In the media world, the big
are getting bigger."

In the aftermath of America Online Inc.'s bid for Time
Warner Inc., the CNBC report last Thursday that News and Liberty Media Group were
considering a bid for GM scarcely raised eyebrows.

"Somebody's going to buy both EchoStar and
DirecTV," Alpert & Associates president Mickey Alpert predicted last week,
"or EchoStar is going to pull an AOL/Time Warner and buy SBC [Communications] or
BellSouth [Corp.]."

"Nothing is preposterous any more," Blum said
last week.

But Blum suggested that if News Corp. really intends to
make a bid for Hughes, talks of a larger, hostile takeover of GM might be the
company's way of forcing the automotive giant's hand into spinning off Hughes
more quickly than it intends to.

"When the GM shackle is removed from GMH, then
it's in play," Bear Stearns Inc. analyst Vijay Jayant said. "That could be
just a matter of time."

Jayant said that because Hughes is a tracking stock, the
only two ways to do a deal are with the blessing of the GM board or through a hostile
takeover of the entire automaker. He said News Corp. may have trouble getting shareholder
approval unless it pays a premium for the undervalued GM stock, and News Corp. would also
need to appease the United Auto Workers union, especially about possible layoffs.

Buying GM just to get Hughes would be "like buying
McDonald's because you like the vanilla milk shakes," The Yankee Group analyst
Bruce Leichtman said.

Because News Corp. already owns stock in DBS player
EchoStar Communications Corp., Blum predicted it would need to sell those interests if it
did acquire Hughes.

While analysts said it makes strategic sense for News Corp.
to acquire Hughes, given its worldwide satellite ambitions and Hughes' plans for
two-way broadband over satellite, some raised concerns over possible culture clashes.

Liberty and GM declined to comment for this story.