Murdoch Sells DirecTV's Satellite Op to Fund Viewer Push

22 April 2004

America's largest satellite broadcaster DirecTV, acquired last year by News Corporation, has sold its 80.5% controlling interest in Nasdaq-listed PanAmSat. The latter operates a network of 29 orbiting satellites transmitting over two thousand TV channels worldwide.

The sale's proceeds -- a useful $3.5 billion (€2.96bn; £1.98bn) -- will be used to reduce DirecTV's debt, add new services and fund a massive drive for new viewers. The buyer is none other than the original 'barbarian at the gate' -- private equity group Kohlberg Kravis Roberts.

NewsCorp placeman Chase Carey, now helming the satellite broadcaster, has set his sights on raising DirecTV's subscriber base from twelve to fifteen million in under two years. Having raided the piggybank, this now seems an attainable target.

But neither Carey nor Murdoch is likely to leave it at that. It is not only the pursuit of profit that motivates the latter -- being numero uno is as much the engine that drives the aggressive tycoon. And even at 15,000,000 subscribers DirecTV will still trail its larger cable rivals, way behind the 21 million commanded by Comcast.

In pursuit of its goal, DirecTV intends to offer a greater choice of local stations, more foreign-language channels and more high-definition channels.

It also plans to invest around $2 billion in replicating the highly successful strategy pursued by NewsCorp's UK unit BSkyB. The main plank of which was upgrading customers' set-top boxes for free to offer a range of new interactive services and digital video recording facilities.

Data sourced from: Sydney Morning Herald; additional content by WARC staff