Last year's $6.8 billion purchase of America's largest satellite operator DirecTV has had its expected impact on News Corporation's formerly healthy balance sheet.

But the Murdoch family-controlled media mammoth has not been slow to redress the massive drain on its cash resources, caused not only by costs associated with the acquisition but also upcoming investment in DirecTV's expansion [WAMN: 22-Apr-04].

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. He is likely to adopt the successful but expensive marketing model that worked so spectacularly for NewsCorp's BSkyB in the UK.

The main plank of the British strategy was the free upgrading of customers' set-top digiboxes, opening the door to a range of new interactive services and digital video recording facilities.

As part of 'operation cash release', the clan Murdoch's UK holding company NewsCorp Investments has sold a number of its British assets (including its 35.4% stake in BSkyB) to other entities within the NewsCorp empire. It is not known whether the deal includes Times Newspapers and the UK unit of book publisher Harper Collins.

Most of those assets, including the BSkyB stake, now belong directly to the ultimate parent company, News Corporation, thereby lubricating the group's access to capital markets.

Accounts recently filed with Companies House in the UK show that NewsCorp Investments had "total recognised gains" of £5.88 billion ($10.43bn; €8.71bn) in the year ended June 30 2003. These mainly comprise a £5.35bn profit on disposals, negating the previous year's £2.37bn loss.

The sale's paper proceeds -- $3.5 billion (€2.96bn; £1.98bn) -- have helped bolster NewsCorp's depleted piggybank. As has the recent disposal of DirecTV's 80.5% controlling interest in Nasdaq-listed PanAmSat for a more tangible $3.5bn in hard cash [WAMN:22-Apr -04].

Data sourced from: Financial Times; additional content by WARC staff