GM to peddle Hughes Electronics for $6.6 billion
LOS ANGELES (AP) – General Motors Corp.’s board on Wednesday approved a bid by News Corp. to acquire control of Hughes Electronics Corp. and its DirecTV service, the nation’s largest satellite television provider, in a deal the companies valued at $6.6 billion. The proposed deal would give News Corp. access to DirectTV’s more than 11 million subscribers and end a three-year effort by media titan Rupert Murdoch to gain a U.S. outlet for his satellite services.
News Corp. will acquire 34 percent of DirecTV parent Hughes Electronics, a subsidiary of GM, by purchasing 19.9 percent of Hughes shares owned by GM. News Corp. also will offer to buy 14.1 percent of Hughes shares owned by the public.
“General Motors is pleased to have reached an agreement with News Corp. that provides substantial value to our stockholders and puts Hughes in a position to capitalize on the future growth potential for direct broadcast satellite television and other related services,” said GM president and chief executive Rick Wagoner.
In addition to DirecTV, Hughes also 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 is subject to regulatory approval as well.
Under the agreement, Murdoch would become chairman of Hughes and Chase Carey, who currently serves as an adviser to News Corp., would become president and chief executive officer of Hughes.
The company would continue to be based in the Los Angeles suburb of El Segundo.
Murdoch, whose News Corp. owns the Fox Network, the Los Angeles Dodgers and other media entities, said the deal will increase competition in the cable markets and provide better services to U.S. 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,” Murdoch said.
AP-ES-04-09-03 1755EDT