LOS ANGELES (AP) – Rupert Murdoch’s News Corp. agreed Wednesday to acquire control of Hughes Electronics Corp. and its DirecTV service, the nation’s largest satellite television provider, in a $6.6 billion cash and stock deal.
The deal would give Murdoch access to DirecTV’s more than 11 million subscribers and conclude the media titan’s three-year effort to gain a U.S. outlet for his satellite network..
The agreement, approved Wednesday by the board of Hughes’ parent General Motors Corp., calls for News Corp. to acquire 34 percent of Hughes. News Corp. would purchase 19.9 percent of Hughes shares owned by GM and offer to buy 14.1 percent of Hughes shares owned by the public.
News Corp. would pay about $14 per share, making the deal worth about $6.6 billion. Hughes shares were valued at $11.48 at the close of regular trading Wednesday, before the deal was announced.
News Corp. would transfer its interest in Hughes to its Fox Entertainment Group subsidiary, which includes the Fox News Channel.
Murdoch, whose News Corp. also owns the Fox network, the Los Angeles Dodgers and other media entities, said the deal will increase competition in the cable markets and give U.S. viewers better services.
“We are forging what we believe will be the premier diversified entertainment company in America today,” Murdoch said.
GM president and chief executive Rick Wagoner said his company “is pleased to have reached an agreement with News Corp. that provides substantial value to our stockholders.”
Besides DirecTV, Hughes owns 81 percent equity of satellite operator PanAmSat and Hughes Network Systems, a broadband satellite network provider.
Murdoch unsuccessfully wooed DirectTV in 2001. EchoStar Communications, a rival satellite broadcaster, tried to buy Hughes for $18.8 billion, but that deal was blocked late last year by federal regulators who felt it would harm competition.
The News Corp. deal also is subject to regulatory approval.
At their convention in Las Vegas, members of the National Association of Broadcasters gave the acquisition a generally positive response, saying it probably would encourage satellite operators to carry local stations. The trade group had opposed the Hughes-EchoStar merger because it would have reduced competition and pressure to carry local stations in smaller markets.
Under the agreement, Murdoch would become chairman of Hughes and Chase Carey, currently an adviser to News Corp., would become Hughes’ president and chief executive officer. The company would continue to be based in the Los Angeles suburb of El Segundo.
AP-ES-04-09-03 2242EDT
Send questions/comments to the editors.
