Date: 29th January 2001

Murdoch In Crucial Talks About Satellite Businesses

Rupert Murdoch has touched off widespread speculation among analysts and financial columnists with his entry into crucial and complicated talks over News Corp's satellite businesses. Murdoch initiated the discourse on Friday when he suggested on a CNBC program that he had shelved plans for an IPO of his Sky Global company, which encompasses his various worldwide satellite companies (principally BSkyB in the U.K.). It had long been assumed that the flotation would come about if and when Murdoch acquired U.S. satellite operator DirecTV or its owner, Hughes Electronics, in turn owned by General Motors. However, a GM spokesman told the London Financial Times over the weekend that the company is continuing to talk to several possible "participants." The spokesman also indicated that GM is concerned about the tax implications of a sale. The automaker's comments were soon succeeded by a Salomon Smith Barney advisory that predicted a reverse takeover by Hughes of News Corp's satellite assets with News Corp retaining control. "We believe News is embroiled in an extremely complicated situation but investors should become familiar with the company's predisposed inclinations in this regard," Salomon analyst Stevyn Schutzman said. At the same time, the British Guardian newspaper commented that Liberty Media Chairman John Malone is exploring the possibility of buying Vivendi Universal's 22.7-percent stake in BSkyB and could form an alliance involving Liberty, a unit of AT&T, and other companies to acquire DirecTV. Meanwhile, shares in News Corp declined another five percent on the Sydney stock exchange today. They had already fallen to $38 on the NYSE on Friday, 43 percent below its 52-week high of $67.

Source: Studio Briefing