News Corp signs satellite TV deal

After months of frustration, and one deal that imploded, Rupert Murdoch has secured a means of floating his satellite television service above the market that has hitherto eluded him: the United States.

An agreement was announced yesterday between Mr Murdoch's News Corporation and the owners of the PrimeStar satellite broadcaster to restructure the company with News Corp emerging with a 30 per cent non-voting stake.

In return, News Corp and its partner, MCI Communications, will contribute to the newly public company, to be named PrimeStar Inc, satellite assets valued at $1.1bn (pounds 672m) as well as valuable transmission sites and federal licences.

Left with 70 per cent of the company would be original PrimeStar partners Time Warner, with about 22 per cent, and Comcast, Cox Communications and MediaOne, with about 6 per cent each. PrimeStar is the second-largest satellite broadcasting service in the US after DirecTV, owned by General Motors.

The deal essentially rescues Mr Murdoch's satellite plans for the US which were left in tatters after the collapse six weeks ago of an early joint venture agreement with EchoStar of Denver, Colorado. The death of that deal has left Mr Murdoch in a morass of litigation.

"I couldn't quite say this is a replacement, but because that deal [with EchoStar] didn't work out, this is the next one we're doing," a News Corp spokesman said yesterday.

In the meantime there were reports yesterday that Mr Murdoch was on the cusp of finalising a $1.7bn deal to acquire one of the largest cable operators in the United States, International Family Entertainment.

IFE is owned by Pat Robertson, the Christian fundamentalist leader who once ran an independent candidacy for the US presidency. Its principal asset is the Family Channel, which is the ninth-largest cable channel in the US.

The PrimeStar manoeuvre also re-establishes peace between Mr Murdoch and the US cable industry that had furiously opposed his EchoStar agreement. The other main partners in the new PrimeStar all have substantial cable interests, with Time Warner being the lead player.

With EchoStar, Mr Murdoch had hoped to launch a type of satellite service that would have directly challenged the grip of the cable industry on most US television viewers.