Murdoch Mortgages BSkyB – to Build DirecTV Warchest?

20 March 2003

News Corporation, the global media mammoth controlled by Rupert Murdoch, announced Wednesday it had issued a bond redeemable for shares in its UK satellite broadcaster BSkyB.

The issue is valued at $1.35 billion (€1.28bn; £0.87bn), prompting speculation on Wall Street and elsewhere that the cash is destined for a warchest to fund the acquisition of US satellite broadcasting giant Hughes Electronics – the world's largest provider of digital television entertainment, broadband services, satellite-based private business networks, and global video and data broadcasting [WAMN: 27-Feb-03].

Late last month Murdoch and fellow US media mogul John Malone of Liberty Media abandoned their plans to jointly bid for General Motors-owned Hughes – instead deciding to pursue their quarry solo. Media observers anticipate an interesting contest, not least because Malone in the largest individual shareholder in NewsCorp – second to Murdoch.

Hughes agreed last year to merge in a $19 billion deal with rival satellite corporation EchoStar, number two in the US market. However, the marriage was blocked by the Federal Communications Commission and the Justice Department last fall on grounds that it would create a monopoly [WAMN: 11-Oct-02].

NewsCorp, which is number zero in the US satellite market, is unlikely to encounter opposition on competition factors, despite its ownership of the terrestrial Fox TV network.

The bonds, which mature on 15-Mar-23, can be exchanged for BSkyB shares after 02-Apr-04 at a premium of 36%-38% above the closing price on 18-Mar-03 of £6.10.

Data sourced from:; additional content by WARC staff