Date: 7th February 2001
In a complicated financial scenario, Hughes Electronics' DirecTV and News Corp's Sky Global Networks may be on the verge of combining to create the world's largest satellite broadcasting company, published reports said today (Wednesday). Under the proposed plan, Hughes' parent, General Motors, would spin off Hughes, which would then take over Sky Global to form a new, publicly traded company in which Hughes would hold a 65-percent stake and News Corp a 35-percent stake. The new entity would have a combined value of about $70 billion, analysts estimated. Despite its smaller ownership, News Corp, lead by Rupert Murdoch, would operate the new company. All of the news reports concerning the negotiations stressed that the deal could unravel. (The Wall Street Journal commented that "several thorny issues need to be resolved and could easily derail the negotiations." The New York Times, citing a person close to the negotiations, said that News Corp Chairman Rupert Murdoch had set a 10-day deadline for G.M.'s management to come to an agreement. "It's fish-or-cut-bait time," the Times source said.) The elaborate deal also involves cash investments of some $1 billion from Liberty Media and $4 billion from Microsoft.
Source: Studio Briefing