DOJ Ask For More News Data


News Corp. said last week that the U.S. Department of Justice has requested additional information on the media giant's pending purchase of a 34% stake in Hughes Electronics Corp., a move that News said should not delay the expected closing of the merger.

News agreed to purchase General Motors Corp.'s 34% stake in Hughes — parent of direct-broadcast satellite service provider DirecTV Inc. — in April, for about $6.6 billion. The deal is currently winding its way through the regulatory process and News Corp. expects to close the deal by the end of the year.

The Federal Communications Commission started the public comment period for the merger on May 16. That process usually lasts about 90 days. Although the Department of Justice declined to give early clearance to the deal — its anti-trust division is currently looking into how the merger will affect competition — that action was expected.

The combination would create a powerhouse of content and distribution, coupling News Corp.'s cable and broadcast networks with DirecTV's 11.3 million DBS subscribers. Although News Corp. has pledged that it will not use its distribution clout to drive high rate increases or to force cable operators to carry other less attractive networks on their systems, the fear that it will do so is prevalent in the cable industry.

In its preliminary material filed with the Securities and Exchange Commission last Thursday, News revealed that the deal requires that GM pay it a $300 million break-up fee if the transaction is not closed by April 9, 2004. News Corp. would pay GM a $150 million termination fee if its stock price falls below $14.08 per share for any 20-day trading period between now and the closing of the deal.