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Monday, 6 August, 2001, 11:31 GMT 12:31 UK
Murdoch faces DirecTV rival
Rupert Murdoch could yet salvage the deal, analysts say
Rupert Murdoch could yet salvage the deal, analysts say
American satellite television company Echostar has made a bid for DirecTV, the television rival Rupert Murdoch wants to buy.

The $30.4bn offer values DirecTV at about 18% more than their current share price.

Hughes Electronics - the owner of DirecTV - has yet to make a response to the bid.

If the Echostar bid was successful, it would deal a blow to News Corporation's ambitions to access the US market and become a global broadcasting giant.

The News Corporation bid is thought to value the merged company at $70bn. Shares in News Corporation fell on the news of the Echostar bid.

Regulators tamed?

Many analysts had believed that News Corporation had all but emerged the victor of the battle to take control of DirecTV.

The world's biggest car maker General Motors, is eager to unload its Hughes Electronics subsidiary, of which DirecTV is a major part, to focus on its core vehicle business.

In July this year, Echostar backed down from its bid to take over DirecTV.

It feared the deal would not stand up to regulator scrutiny.

It now believes it stands a better chance from President George W. Bush's administration, a report in the Wall Street Journal suggests.

Blow to Murdoch

A successful Echostar bid would be a huge blow for Rupert Murdoch.

The media giant has satellite broadcasting companies in Europe, across Asia, in Latin America, Japan and Australia.

Taking control of DirecTV would complete the global jigsaw.

If Rupert Murdoch succeeded in combining this with the foreign satellite assets of DirecTV, he would control a broadcasting giant worth nearly $50bn.

Analysts say the Echostar bid by no mean spells an end to the battle.

"We have seen over many years that Murdoch can pull amazing rabbits out of his hat. It never pays to be too negative in looking at the stock, because Murdoch is rightly regarded as a genius in the sector," Andrew Sekely, director of equity trading at Intersuisse in Sydney told the BBC's World Business Report.

"He is not a person to trifle with."

A better deal?

There are clear advantages to both deals.

The combination of EchoStar and Hughes would create a company with 16 million subscribers and a rival to AT&T Broadband, one of the largest cable operators in the US.

The combined company would save on programming costs as well as lower subscriber acquisition costs.

However, some observers say this could run into problems because the technology behind their set top boxes are different.

If DirecTV links up with News Corporation, it would also save costs by combining Sky Global's Latin American operations with DirecTV.

Microsoft is believed to be contributing $3bn in cash to the Murdoch bid in exchange for a minority stake.

The BBC's James Whittington
"DirecTV is the largest provider in the US"
Andrew Sekely, sector analyst
"Murdoch can pull amazing rabbits out of his hat"
See also:

02 May 01 | Business
Murdoch's DirecTV talks back on
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