Murdoch clinches DirecTV with $6.6bn US deal
Rupert Murdoch vastly consolidated his command over the distribution of television programming in the US by finally clinching a $6.6bn (£4.3bn) deal to buy a controlling interest in Hughes Electronics, owner of DirecTV, the country's largest satellite television provider.
The deal came together after three years of frustrating stop-and-go talks between News Corp and General Motors, the owners of Hughes Electronics. It promises not only to give Mr Murdoch powerful leverage over the whole industry in the US but also to complete his global jigsaw of satellite platforms.
Neil Chenoweth, author of an unauthorised biography of the media titan, said: "This is a transforming transaction for him. He's just going to be an unstoppable colossus."
Investors responded with initial caution to the transaction, however, sending shares in News Corp down by almost 10 per cent in early trading. This reflected concerns that the deal will be dilutive to earnings in the short term, with the financial benefits from DirecTV only expected to show from 2006.
Nonetheless, patience seems to have paid off for Mr Murdoch, who is said to have a personal worth of $5.5bn. In 2001, he made an offer for DirecTV reported to have been $30bn. He was then trumped by EchoStar, a competing satellite company in the US, which paid a slightly higher price to land DirecTV. However, competition regulators in Washington subsequently blocked that deal.
It is unlikely that competition concerns will arise over this transaction. Even so, concerns were being raised yesterday that Mr Murdoch may attempt to squeeze cable competitors by raising the price of content generated by his own Fox Entertainment Group, which includes Fox Television, his Fox all-news station as well as the 20th Century Fox film studios.
In a conference call, Mr Murdoch said that DirecTV "represents an invaluable outlet for our television products". But he denied he would attempt to raise prices or deny output for cable operators. "We will make our content readily available to all satellite television providers as well as cable and other competing platforms," he insisted.
DirecTV has 11.3 million subscribers in the US, making it the single biggest distributor of programming. The company will be folded into the Fox Entertainment Group. Mr Murdoch, meanwhile, acquires a 34 per cent controlling interest in Hughes and will become chairman of the board.
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