The stakes were upped yesterday in what promises to be the most bruising battle yet fought in Rupert Murdoch’s bare-knuckle career.

The board of General Motors – ultimate owner of US satellite broadcaster DirecTV – acknowledged that it has an obligation to consider any serious competing proposals to those already lodged by Murdoch’s NewsCorp [WAMN: 24-May-01]. However, stressed GM, it remained “focused on negotiations” with the latter.

Insiders believe that GM opened the door a chink to EchoStar – which it has consistently rebuffed – simply to strengthen its negotiating position. That view carries credence, especially as Washington is thought unlikely to approve a merger between DirecTV and EchoStar – the nation’s two largest satellite broadcasters,.

Those close to Echostar say it is working on a two-stage proposal: (1) To pay GM mucho cash for a minority stake in Hughes Electronics, the GM-controlled parent of DirecTV; and (2) Seek regulatory approval for a full merger.

GM could warm to such a proposal, believe the insiders, as it is eager to cash-in on its investment in Hughes on which it has hung a $5 billion price tag. However, it was unclear yesterday whether EchoStar will be able to lay its hands on that kind of money.

News source: Financial Times