Murdoch withdraws DirecTV bid

News Corp has pulled out of the battle to buy DirecTV, the biggest United States satellite broadcaster, and its parent Hughes Electronics after a year of talks.

"We have no option but to withdraw immediately our fully negotiated and financed proposal," said Rupert Murdoch, the media mogul who is News Corp's chief executive.

News Corp ditched its bid after a board meeting of Hughes Electronics' parent, General Motors, failed to decide between the two offers.

Hughes would have been a excellent strategic fit for our global platforms

Rupert Murdoch

The decision leaves rival EchoStar as the only bidder for DirecTV and deals a blow to Mr Murdoch's ambition to consolidate his position in the US media market, industry analysts say.

'Disappointed'

Mr Murdoch said: "Hughes would have been an excellent strategic fit for our global platforms, and we are disappointed with the (GM) board's inaction in the face of an as-yet unfinanced counter proposal".

News Corp had hoped to merge DirecTV with its Sky Global network, creating a worldwide platform to distribute its huge portfolio of TV shows and films, and spin off the business as a separately-quoted company.

With 10 million subscribers, DirecTV reaches 10% of US homes, one of the reasons for the satellite broadcaster's strong attraction for News Corp.

Warning signs

News Corp had been in on-off talks with GM since October last year and linked up with Microsoft and Liberty Media, run by John Malone, as its US partners backing the purchase.

Then in August this year, number two US satellite broadcaster EchoStar, entered the fray. It has 6 million subscribers.

The deal has been falling apart for a while and in early October Mr Murdoch acknowledged he remained only "50-50" confident that News Corp would emerge the winner.

GM, which owns a 30% stake in Hughes, has said recently that sharp falls in Hughes' share price could make patching together an agreement "more difficult".

Strong growth

At a time when many media firms were warning that cancelled advertising after the terrorist attacks would hurt their profits, Hughes reported 24.6% revenue growth to $2.1bn for the three months from July to September 2001.

DirecTV attracted 425,000 new subscribers in that period and posted revenue growth of 18% to $1.3bn.

Both Hughes and rival suitor EchoStar have declined to comment on News Corp's withdrawal. Nor has there been any comment from GM.