Murdoch to become biggest satellite broadcaster in US

Rupert Murdoch’s News Corporation has agreed to acquire control of Hughes Electronics Corp and its DirecTV service, America’s largest satellite television provider, in a $6.6bn (€6bn) cash and stock deal.

The proposed deal reached yesterday would give News Corp access to DirecTV’s 11 million-plus subscribers and conclude media tycoon Murdoch’s three-year effort to gain a US outlet for his global satellite television network.

News Corp will acquire 34% of Hughes, a subsidiary of General Motors, by purchasing 19.9% of Hughes shares owned by GM. News Corp will also offer to buy 14.1% of Hughes shares owned by the public.

News Corp will pay about $14 (€12) a share, making the deal worth about $6.6bn (€6bn). The company will then transfer its interest in Hughes to its Fox Entertainment Group subsidiary, which includes the Fox News Channel.

Murdoch, whose News Corp also owns other media entities, said the deal would increase competition in the cable markets and provide better services to US viewers.

“With Fox taking a significant interest in Hughes, we are forging what we believe will be the premier diversified entertainment company in America today, with leading assets in film, television broadcasting and production, cable programming, and now pay-TV distribution,” he 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”.

In addition to DirecTV, Hughes also owns 81% equity of satellite operator PanAmSat and Hughes Network Systems, a broadband satellite network provider.

Murdoch unsuccessfully wooed DirecTV in 2001. EchoStar Communications, a rival satellite broadcaster, tried to buy Hughes for $18.8bn (€16bn), but that deal was blocked late last year by federal regulators who felt it would harm competition.

The News Corp deal is also subject to regulatory approval.