EchoStar Set to Enter Battle for Hughes

24 May 2001

US satellite television operator EchoStar Communications is reportedly readying a bid to acquire its larger rival Hughes Electronics, in an attempt to snatch the glittering prize of DirecTV from under the nose of Rupert Murdoch’s NewsCorp.

It is thought that EchoStar could make an offer to Hughes and its parent General Motors – both currently in protracted negotiations with NewsCorp [WAMN: 01-May-01] – as soon as next week.

EchoStar chairman Charlie Ergen, a long-standing Murdoch rival, has approached companies such as AOL Time Warner and General Electric to provide financial backing for the bid, although with what success is unknown. EchoStar has a war-chest set to reach nearly $2 billion but needs extra funds to meet the $5bn asking price for GM’s 30% stake in Hughes.

Any bid from EchoStar would raise interesting regulatory questions – a merger with Hughes would dominate satellite television, but Ergen claims this would benefit consumers by providing better competition against the larger cable TV industry.

However, it is not yet clear whether the rumored bid is anything more than an attempt to drive up the price demanded of NewsCorp.

News source: Wall Street Journal