Murdoch may get second chance to snare DirecTV

Rupert Murdoch may get a second chance to acquire DirecTV following reports that federal regulators in Washington are leaning towards blocking a proposed $11.2bn (£7.2bn) acquisition of the satellite television provider by its sole rival in the United States, EchoStar.

Officials in the competition division of the US Justice Department have reached a preliminary conclusion that the EchoStar-DirecTV deal should not be allowed to proceed, The New York Times reported. A final decision is expected within weeks.

The report sent shares in EchoStar sliding in New York, where they had dropped 35 cents, or 2 per cent, at the end of morning trading. Shares in DirectTV, which is owned by Hughes Electronics, a unit of General Motors, were boosted on the news, as were shares in Mr Murdoch's News Corporation.

Mr Murdoch walked away from talks with GM on buying DirecTV last year after he was trumped by an unsolicited bid from EchoStar. It was seen as a rare defeat for Mr Murdoch, who had long been hankering to add DirecTV to his global portfolio of broadcast interests. There are problems with the absorption of DirecTV by EchoStar, however, because it would leave only one satellite TV provider in the US. While there would still be competition between the new company and traditional cable services in most parts of the country, it would leave consumers in rural areas, who do not have access to cable, with no choice but to take the only remaining satellite service.

Mr Murdoch could use DirecTV to pump out the content already available on his Fox television network in the US. He had also intended to tie it together with Sky Global to forge an around-the-world satellite platform that he had then hoped to spin off into a separate company.

GM said it had no reason to think the deal with EchoStar was dead. "As far as GM is aware the process is ongoing and not complete," a spokesman, Jerry Dubrowski, said. "We believe the merits of the case are strong and we believe the DOJ is evaluating the transaction based on merits of the case."