MUMBAI: The timing was certainly apt. As American-led forces marched into Baghdad, Rupert Murdoch's media empire News Corp, which has made no bones about it's unambiguous and undivided support for US president George Bush's invasion of Iraq, made its own victory announcement.
Murdoch's three-year hunt for Hughes Electronics and its DirecTV unit is almost over bar the shouting (whether there will be opposition from regulators remains to be seen though). News Corp yesterday confirmed it plans to acquire 34 per cent of the leading US satellite broadcaster for about $6.6 billion in cash and stock. If as expected the deal is closed, Murdoch's dream for global satellite TV supremacy will be well and truely realised.
As per the deal thrashed out between News Corp, General Motors and Hughes Electronics, Murdoch's media conglomerate will acquire GMs 19.9 per cent stake in Hughes and a further 14.1 per cent of Hughes from public shareholders and GMs pension and other benefit plans. At closing, News Corp.s 34 per cent ownership interest will be transferred to Fox Entertainment Group (FEG), an 80.6 per cent-owned News Corp subsidiary, in exchange for a $4.5 billion promissory note and approximately 74.2 million shares in Fox at $27.99 per share, increasing News Corp.s equity interest in FEG to approximately 82 per cent.
If the deal goes through, it will trigger a clause in a previous agreement News Corp has with John Malone's Liberty Media to make him a partner. Fallen by the wayside are potential suitors Cablevision Systems and SBC Communications.
Following completion of the acquisition, which is subject to regulatory approvals, a tax ruling, and GM stockholder approval, Murdoch will become chairman of Hughes, while News Corp.s former co-COO, Chase Carey, will be president and CEO of Hughes. Hughes corporate senior executive V-P Eddy Hartenstein will be vice-chairman and report to Carey.
The businesses contained in Hughes include leading satellite broadcaster DirecTV, which has more than 11 million subscribers in the United States; an 81% equity holding in satellite operator PanAmSat; and Hughes Network Systems, the world's leading provider of broadband satellite network solutions.
A company release quoted Murdoch as saying yesterday: "Today we announce a genuinely exciting and transforming deal for News Corp., the Fox Entertainment Group and Hughes Electronics. The benefits will be felt almost immediately in the competition it will offer cable, the richer services it will provide to American viewers, and the value it will create for the shareholders of Fox, News Corp. and Hughes.
"With Fox taking a significant interest in Hughes, we are forging what we believe will be the premier diversified entertainment company in America today, with leading assets in film, television broadcasting and production, cable programming, and now pay-TV distribution. The alignment of Foxs valuable content assets and DirecTVs distribution platform will provide significant benefits to consumers and greatly enhance the future businesses of both companies."
If and when approvals from antitrust regulators for the DirecTV buyout come through, Murdoch's vision of controlling a global network of pay-TV businesses that span the US, Britain, Europe, Asia, Latin America and Australia will have been realised.