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EDITIONS
Monday, 10 February, 2003, 20:14 GMT
US satellite TV battle hots up
Satellite dishes
Satellite broadband failed to challenge cable modems
SBC Communications, one of the biggest US phone firms, is thought to be entering the battle to buy satellite TV company DirecTV in a move which would stoke rivalry between phone and cable firms.

Hughes Electronics, DirecTV's owner, had planned to sell it to competitor EchoStar for $18bn, but that deal collapsed late in 2002 after regulators demanded massive concessions on competition grounds.

That, observers thought, left the field open for Rupert Murdoch's News Corp - the jilted suitor in the deal - to step in with a bid to fill in the US gap in his global satellite network.

But now, according to the Reuters news agency, SBC will be examining Hughes's books as early as next week at the same time as News Corp.

Cable vs phone

Ever since EchoStar's bid fell over, both Hughes and its 30% shareholder General Motors have been trying to drum enough up interest in DirecTV to allow an auction, and thus produce a higher price.

From SBC's point of view, meanwhile, acquiring DirecTV would strengthen its arm when competing with cable networks to provide video and TV services.

Unlike their European counterparts, US cable operators are only beginning to move into telephony services, although broadband via cable modems have been big business for some time.

Phone firms, for their part, have been less than successful at managing video delivery, as AT&T's sale of its under-performing cable subsidiary to Comcast last year demonstrated.

Now that the cable industry shift is happening, the big local phone companies are looking for ways of matching them.

But with heavy debt still a problem, some analysts fear SBC - which owes a total of $22bn, with cash reserves of $3.57bn - simply cannot afford DirecTV.

See also:

14 Dec 02 | Business
10 Dec 02 | Business
10 Oct 02 | Business
29 Oct 01 | Business
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