Murdoch Walks Away From ‘Dream’ DirecTV Deal

Murdoch Walks Away From ‘Dream’ DirecTV Deal

Rupert Murdoch, frustrated with delays and torturous negotiations, has walked away from what many considered the ‘dream’ deal of his career – one which would have made him the greatest TV mogul ever, reaching more people in more countries than anyone else in history.

For the past six months Murdoch’s News Corp has cogitated, negotiated and restructured in order to engineer a complex bid for DirecTV, America’s largest satellite broadcaster, owned by GM-controlled Hughes Electronics . Yesterday EchoStar Communications, whose bid was initially ridiculed by many within the industry, struck a deal with GM to merge their satellite operations with those of Hughes Electronics.

The GM board had been in lengthy discussions as to which bid to accept, Murdoch had brokered a complex and cash-free deal worth roughly $30 billion whilst EchoStar’s bid totalled around $31.5 billion including a key cash element of $5.5 billion – thanks to a bridging loan from Deutsche Bank and UBS Warburg. After allowing EchoStar more time to ‘beef up’ their bid, the GM board announced that it was delaying its decision by a further 48 hours. Following 18 months of preparation and six weeks of smallprint negotiations with GM, Murdoch withdrew his offer claiming that he felt ‘deceived’ by GM’s lack of good-faith.

GM will sell $4.2 billion of Hughes stock to EchoStar whilst retaining some ownership themselves, EchoStar would get four of nine board seats and gain the right to appoint one or two independent directors and Ergen would own 17% of the stock but have a voting stake of about 37%.

As the proposed deal merges the two largest satellite operations in the US, it is likely that the deal will be subject to rigorous scrutiny by US regulators.

Subscribers to MediaTel Insight can access more national and international media analysis, forecasts and news. For subscription details please visit the site.