London, Feb 11: Mr Rupert Murdoch's move to take control of the US satellite TV provider DirecTV has received an initial thumbs up from General Motors' board but a final deal will take at least another two weeks to wrap up, industry sources said last week. They said the board of GM's Hughes Electronics Corp, which houses DirecTV, was also due to convene shortly, after the companies provisionally agreed to merge Murdoch's Sky Global satellite arm into Hughes to create a $70 billion giant. "We've shaken hands on the deal ... but the documents have not been signed and that should take another two or three weeks," said a source close to the talks. "(U.S. cable operator) Comcast Corp. was the only other serious bidder but I think they found there were too many regulatory problems," the source added.Mr Murdoch's News Corp Ltd declined to comment. However, General Motors insisted it was still in talks with a number of parties and has taken no decision about Hughes. "The General Motors board was updated on the status of the discussions regarding the disposal of Hughes earlier this week, but it did not take any action to approve any transaction," said Mr Toni Simonetti, GM's general director of communications.
A deal would create the world's largest pay-TV operator and plug a glaring hole in Mr Murdoch's satellite television empire, whose interests focus mostly on Europe and Asia including British Sky Broadcasting and Asia's StarTV. DirecTV, the largest of Hughes assets, is the number one US satellite TV provider with 9.5 million subscribers. The two sides have been in talks for some months and reached a break-through earlier this week, but legal and tax issues surrounding the complex structure of the deal means it will still take some time to announce, industry sources said and noted that despite initial GM approval, the auto group can remain in talks with other parties and the transaction would need final approval from the boards of all three firms.
Under the terms of the deal being discussed, News Corp would land an initial 35 per cent of the combined entity, which would take Hughes' New York listing, but Mr Murdoch would emerge as the largest, single shareholder after a series of complex deals. He would also take the role of chairman while Mr Chase Carey, who heads Sky Global, would become chief executive, industry sources said. The structure under discussion would solve Mr Murdoch's problem of finding cash to finance a purchase of Hughes, as originally envisaged. News Corp is already heavily leverage after a series of acquisitions, including Chris Craft Industries Inc. The transaction would see GM spin off Hughes, which would then acquire Sky Global in return for stock, initially giving Hughes shareholders around 65 per cent of the new entity.
Microsoft and the US programmer Liberty Media are also expected to take small stakes in the new company. GM, which controls Hughes' voting stock but owns only about 30 per cent of its publicly traded shares, has made it clear it wants some cash from a deal to shore up its balance sheet and the new combination is expected to sell off Hughes' arm PanAmSat Corp.
(Reuters)
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