SBC emerges as potential rival to Murdoch's DirecTV hopes By Eli Greenblat February 10 2003
News Corp's Rupert Murdoch could have a new rival for the control of General Motors's DirecTV satellite television business, with SBC Communications rumoured to be working on a bid of its own.
A report in the online edition of The New York Times reported the network could fetch over $US10 billion ($16.9 billion).
General Motors has been trying to sell the unit for more than three years as it seeks to reduce its $US202 billion debt.
The tussle over DirecTV comes as News Corp prepares to deliver its second quarter earnings results on Thursday.
ABN Amro is expecting the media group to report a 38 per cent increase in net profit to $US266 million for the three months to December 31, driven by its Television and Cable Networks segments.
On the DirecTV issue, General Motors spokeswoman Toni Simonetti was quoted yesterday as saying: "We have been engaged in evaluating strategic options ... we're looking at a number of options, but are not going to comment on anything specific at this time."
A spokesperson for News Corp declined to comment.
Securing DirecTV has been a long-held dream of Mr Murdoch, who is seeking a satellite footprint in the US to match his existing portfolio of global television and media assets.
Mr Murdoch's courting of General Motors was ultimately spurned last year when it offered the satellite business to EchoStar Communications instead.
However, EchoStar was later blocked from buying the assets by US federal and state regulators, placing News Corp back in the front line to pick up the business.
Now it seems that telecommunications heavyweight SBC could sideline News Corp's ambitions for a second time, and those of second potential rival bidder John Malone's Liberty Media Corp, with SBC chief executive Edward Whitacre, seeking new revenue sources as earnings from its telephone business decline.
SBC would acquire 11.2 million customers with the purchase of DirecTV.
"SBC is clearly looking for avenues of revenue growth," said F. Drake Johnstone, an analyst at Davenport & Co.
SBC has sold $US6.4 billion of assets in the past two months, including its stake in Bell Canada, and its share of French phone company Cegetel SA, and could have the balance sheet power to now make a play for DirecTV.
The phone company, which is based in San Antonio, had $3.6 billion of cash at the end of 2002.
But Mr Whitacre said in an interview in November that proceeds of asset sales would go towards reducing debt rather than acquisitions. The company owed $22 billion at the end of 2002, down from $26 billion at the end of 2001.
News Corp will report its second quarter results on Thursday.
