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
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.