Telepiu taken, DirecTV within grasping distance of Murdoch

MUMBAI: News Corp chairman Rupert Murdoch looks to be within touching distance of becoming arguably the most powerful media magnate on the planet.



The European Union has just given Murdoch's News Corp the go ahead for buying Italian pay-TV firm Telepiu from Vivendi Universal for $985 million. A new entity Sky Italia will be created by the merger. The all-clear came after News Corp offered concessions including limits of three years on contracts with film studios and two years on contracts with soccer clubs.

Will Murdoch be raising a toast soon with his DirecTV success as he did in China sometime back?

And as far as the far bigger prize of control of long-coveted US satellite pay-TV network DirecTV, which will complete the last major piece of his global satellite ambitions goes, Murdoch's the only serious bidder left in the fray.

Murdoch said as much when he told Reuters in California on Wednesday that DirecTV deal was now just a matter of money.

How much money? Reports say it will cost about $7 billion - less than a third of what Murdoch was thought to be prepared to pay for DirecTV two years ago when he made his initial pitch for Hughes Electronics, which included America's biggest satellite broadcaster with 9.5 million subscribers. That number had gone up to 11.2 million at the end of 2002.

It has all worked out well finally for Murdoch who walked away from the DirecTV deal in October 2001, furious over the "betrayal" by the GM board (Hughes is a GM subsidiary).

Murdoch had reason to feel deceived. After all, he had then to stand in frustration and watch a whole year of tough bargaining go up in smoke after Charlie Ergen's rival satellite operator Echostar threw its hat in the ring.

The reasons as to why US regulators blocked Ergen's bid have been well documented. Suffice it to say that the regulators' decision followed extensive lobbying from News Corp. What must have really got Ergen's (a former professional poker player) goat is the fact that not only did he have to finally abandon his takeover bid in December 2002, he also had to pay $600 million in termination fees.

The four months since Ergen was forced to concede defeat have not been without drama, what with Liberty Media's John Mallone and US telecoms giant SBC at different times pitching for DirecTV. Malone ultimately backed away from challenging Murdoch, instead opying to back the News Corp bid and upping his own stake in the the company from 17.5 per cent to 19 per cent. And on 2 April SBC dropped out of the bidding.

It's not all over though for Murdoch. The fat lady still has to sing what with the money that has to be raised as well as the approvals from antitrust regulators still awaited. But the way events have unfolded, there would be very few who would be willing to put down bets that Murdoch will fail to net DirecTV. And if he does get DirecTV, that would give Murdoch a global network of pay-TV businesses that span the US, Britain, Europe, Asia, Latin America and Australia.

All bets off?

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