As predicted [WAMN: 09-Apr-03] Australian-born media tycoon Rupert Murdoch pulled off the deal of his life Wednesday when the board of General Motors accepted News Corporation’s offer of $6.6 billion in shares and cash for a 34% controlling stake in the automaker’s satellite TV unit Hughes Electronics, parent of DirecTV.
Hughes/DirecTV has long been the principal object of Murdochian desire as the potential hub of the mogul’s global network of satellite TV operations. And although he was outbid last year by EchoStar’s Charlie Ergen, that unblinking saurian eye remained fixed on the ball, confident that Ergen’s bid would fall foul of regulators.
As WAMN commented at the time [30-Oct-2001]: “Many onlookers also believe that Murdoch is gambling on the deal’s rejection by competition authorities, leaving the field wide open again – and Hughes’ negotiating position considerably weakened.”
Although News Corp executives were coy about potential savings once DirecTV is on the operating table, word is they are planning surgery in the region of $1bn-$1.5bn. This will be conducted by NewsCorp placeman Chase Carey, a TV doyen and Hughes chief-executive-in-waiting. Insiders say he will target his scalpel on marketing, call centre costs, distribution and satellite installation contracts.
Although the sale is subject to approval by the Federal Communications Commission – and may also need the blessing of the US Justice Department – few believe it will not be granted given that there are no obvious antitrust concerns. Despite this, the scrutiny process is expected to last between six to nine months.
Data sourced from: Financial Times; additional content by WARC staff