ncp finalises directv deal

Big trades today on Aus market... trades of over 550k at a time... Deal is about to be released


April 8, 2003: 7:19 p.m. EST


LOS ANGELES -- News Corp. (NWS) and Hughes Electronics Corp. (GMH) are putting the final touches on a $6 billion-plus deal in which News Corp. would acquire control of the satellite broadcaster after a three-year quest, according to people close to the situation.

Executives at both companies are optimistic that an agreement is imminent and can be announced in a day or two, say people close to both companies.

The deal would mark a milestone for News Corp. Chairman Rupert Murdoch, who has pursued control of the parent company of DirecTV since 1999. Now that DirecTV finally appears within News Corp.'s grasp, however, Mr. Murdoch must devise a plan to revitalize the satellite broadcaster against tough cable TV competition and a harsh economic environment.

News Corp.'s proposal calls for it to buy the 20% of Hughes shares owned by parent General Motors Corp. (GM). Hughes is a tracking stock of GM. In addition, News Corp. will make a tender off to buy another 15% of Hughes shares owned by the public, which would give it a 35% controlling stake in the satellite broadcaster. News Corp. will pay about $13.50 per share, or a total of about $ 6.6 billion. GM will receive mostly cash for its shares while the public shareholders who tender will receive a combination of cash and stock, according to a person with knowledge of the plan.

That is considerably cheaper than what News Corp. would have paid had it been successful when it first tried to buy Hughes three years ago. In 2001, when News Corp. sought to acquire all of Hughes, the proposed deal was valued at about $25 billion in cash and stock. The difference between then and now is a reflection of the decline in Hughes's share price. News Corp. this time also is seeking only a large enough stake to gain effective control.

Both News Corp. and Hughes declined to comment.
Dow Jones Newswires 04-08-03 2319ET Copyright (C) 2003 Dow Jones & Company, Inc. All Rights Reserved.

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April 9, 2003: 7:45 AM EDT

NEW YORK (Reuters) - Rupert Murdoch is poised to finally crack the U.S. satellite television market with a deal to acquire a controlling stake in Hughes Electronics Corp. and its industry-leading DirecTV business for about $6.8 billion, according to people close to the situation.

The two sides were negotiating final details late Tuesday night and an announcement could be made as early as Wednesday, these people added. However, last-minute wrangling could push an announcement until later in the week and talks could still break down, they cautioned.

Under the terms of the deal, Murdoch's News Corp. (NWS: Research, Estimates) would buy the 20 percent of Hughes owned by General Motors Corp. (GM: Research, Estimates) for about $14 a share -- a 22 percent premium over Hughes' (GMH: Research, Estimates) $11.50 closing price Tuesday -- and would offer to buy another 15 percent for the same price from the company's public shareholders.

The price for the 35 percent Hughes stake amounts to $6.76 billion in all, based on Hughes' 1.38 billion outstanding shares.

GM would receive mostly cash and the public shareholders a higher ratio of shares to cash, the sources said.

GM would spin off Hughes, currently a tracking stock tied to GM's shares, into a new company in which News Corp. would be the largest single shareholder. News Corp. would have operational control of the new entity, but not voting control.

Murdoch had been negotiating for a majority of the board of the new company but is likely to wind up with just a large minority, the sources said.

GM, Hughes and News Corp. officials declined to comment.

Media analysts said the deal appeared broadly in line with expectations, but were keen for clues on how the bid would be funded and the role cable king John Malone's Liberty Media Corp. (L: Research, Estimates) would play.

"What hasn't been released is how it will be funded, whether Malone will provide more cash into the deal, and, if shares are issued, what structure that share issue will take," said Peter Shorthouse, media analyst at ABN Amro in Sydney, Australia.

Liberty, which also considered bidding for Hughes, recently reached a deal giving it the option to buy $500 million in preferred News Corp stock, raising the likelihood the pair would make a joint offer.

News Corp's Australian shares rose 6 cents, or 0.7 percent, to A$11.73, putting the stock some 25 percent up from its mid-March five-month closing low.
Two decades later

The deal comes almost exactly two decades after Murdoch first tried to enter the U.S. satellite TV business. DirecTV's 11.3 million U.S. subscribers, the most in the country, would complement News Corp.'s European, Asian and Latin American satellite services.

It also would end GM's attempts for more than two years to exit the business and would provide the automaker with money for its underfunded pension plan.

Rival satellite owner EchoStar Communications Corp. (DISH: Research, Estimates) edged out Murdoch in 2001 when it reached a $30 billion deal with Hughes. Regulatory opposition quashed the deal a year later, leaving GM to auction the unit again.

Murdoch first tried to enter the U.S. satellite business in 1983 with a venture called Skyband that never took off. He currently owns a string of satellite businesses across the world, including BSkyB in Britain, Stream in Italy, SkyTel in Latin America, Star TV in Asia and Foxtel in Australia.

For News Corp., the U.S. satellite market would provide a huge platform to distribute the news and sports channels it owns and could give Murdoch leverage against cable operators that carry the networks.

Hughes also owns DirecTV Latin America, which is operating under bankruptcy protection, satellite high-speed Internet provider Hughes Network Systems and an 81 percent stake in satellite operator PanAmSat Corp. Top of page