Murdoch close to clinching 'transforming' US satellite deal

Rupert Murdoch yesterday moved close to acquiring DirecTV, a deal that would give him US television distribution for the first time, after the competing bidder withdrew.

Mr Murdoch has been trying for a US distribution arm for 20 years and finally achieving that would further his global ambitions. It is understood that his News Corporation will launch a formal bid for a controlling stake in DirecTV, put up for sale by General Motors, in the next week. Talks between GM and SBC Communications, the other possible buyer, have apparently broken down, leaving News Corp as the only likely contender.

One industry source said: "This is a transforming deal for News Corp. It would guarantee distribution in the US, which is the biggest market."

Mr Murdoch owns pay-TV businesses in the UK, Italy, Australia, Asia and Latin America. In the US, although News Corp has Fox, a US network, it has to rely on other companies, such as the cable operators, for distribution. Mr Murdoch tried to buy DirecTV in 2001, in a complex deal that would have seen it merged with a new Murdoch-run company called Sky Global Networks – including all News Corp's satellite interests, such as its stake in BSkyB.

Mr Murdoch was convinced he had clinched the deal but was thwarted by a last-minute cash counter-offer from EchoStar Communications, the other big US satellite operator. He warned GM that the EchoStar transaction would never get past regulators, and, sure enough, it was blocked late last year.

This time, Mr Murdoch is only talking to GM about buying a 20 per cent stake, but it is possible that News Corp would then launch a tender offer for more shares, some of which have a separate listing. A price tag of $3bn to $4bn (£1.9bn to £2.5bn) is put on the stake, which would give News Corp control of the venture. DirecTV would greatly increase News Corp's leverage in negotiating with hardware and content suppliers.

News Corp can call upon cash resources of $4.5m, including a possible $500m from the media tycoon John Malone, for the DirecTV deal. Mr Murdoch is not thought to currently want to try to raise the $15bn needed to buy the whole of DirecTV. Nor are there plans to put it together with the Sky interest any more.

Separately, another part of the global jigsaw fitted into place for Mr Murdoch yesterday. In Italy, a deal to acquire Telepiu, a pay-TV operator, was cleared by the European Commission after News Corp agreed to concessions. News Corp already owns the other pay-TV business in Italy, Stream, giving it complete control of the market in that country.