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News Corp. Near Pact to Buy DirecTV
By Jon Elsen  
N.Y. Post
News Corp. and General Motors were getting close to a deal Tuesday night that would put the giant media company in control of U.S. satellite operator DirecTV, according to several published reports.

Under terms of the transaction, GM would spin off its Hughes unit, which includes DirecTV. Hughes would then be merged with News Corp.'s digital businesses, Sky Global Networks, The Financial Times reported.

News Corp. and GM reached a tentative agreement, but the deal still needs approval from the boards of News Corp., Hughes and GM, The Financial Times said.

News Corp., owner of The New York Post and FOXNews.com, did not comment. Hughes spokesman Richard Dore told Reuters: "We're not going to get into any speculation until we're ready to announce something, if a deal does occur. We've said all along that, yes, talks are under way, but we don't go into any details of elements of the talks."

GM could not be reached.

News Corp. Chairman Rupert Murdoch would be chairman of the combined company, which would have a value of roughly $70 billion, The Financial Times said. The deal values Hughes at about $45 billion, the paper said.

DirectTV, with its 10 million subscribers, would give News Corp. a powerful U.S. satellite presence, rounding out the company's unparalleled global satellite footprint.

News Corp.'s satellite interests include Star TV in Asia and British Sky Broadcasting in the United Kingdom. The company also has a stake in pay-TV operators in Germany, Italy and Latin America, but has lacked coverage in the United States.

Microsoft would reportedly invest about $4 billion to $5 billion in the new combined company, becoming a significant minority investor while bringing technological expertise.

In particular, Microsoft would help with development of set-top boxes that ultimately would provide viewers with interactive services that would include hundreds of channels and Internet access.

In addition, Liberty Media Chairman John Malone, a big investor in News Corp., would reportedly become a significant investor in the new company.

Sky Global would account for about 35 percent of the combined company, and Hughes shareholders would have about 65 percent, The Financial Times said.

Assuming the deal is done, the new company would sell its 81 percent stake in PanAmSat, a commercial satellite operator that is part of Hughes, for between $6.5 billion and $7 billion, according to the reports.

In addition, GM would reportedly be bought out of the portion it still owns of the new combined company for about $8 billion. At that point, News Corp. would be the largest single shareholder in the new company.

GM board members considered the deal Tuesday, but none of the three boards involved has yet to approve it.

Hughes is a subsidiary of GM, with its shares trading as a tracking stock. The public owns 70 percent of the shares, and GM owns the rest. Hughes shareholders wouldn't get a premium for their shares, but could instead get ownership in a larger, more valuable company, The Wall Street Journal reported.

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