General Motors has entered formal negotiations with satellite television firm EchoStar over the latter’s $29 billion bid for GM unit Hughes Electronics, parent of America’s number one satellite TV broadcaster DirecTV.

The move may indicate that EchoStar chairman/ceo Charlie Ergen has finally forced the auto giant to consider the offer seriously following a protracted public courtship. GM has a legal obligation to examine the bid, otherwise it could face lawsuits from unhappy shareholders.

However, the discussions with EchoStar may, say some sources, speed up GM’s talks with NewsCorp, which has been trying to buy DirecTV for months [WAMN: 04-Dec-01]. NewsCorp remains the favorite, since GM is thought to be unwilling to face the regulatory scrutiny a deal between Hughes and EchoStar (the two largest satellite operators in the US) would inevitably attract.

Ergen has been eager to talk directly with GM, following a series of unsuccessful meetings with executives of Hughes and DirecTV. GM never formally discussed proposals arising from those talks, and EchoStar was forced to admit defeat, before resurrecting its bid a few weeks later [WAMN: 16-Jul-01; 06-Aug-01].

Commented EchoStar: “We’re pleased that GM is seriously considering our offer and we are now having direct conversations with them.”

News source: Financial Times