SBC Eyes Buying DirecTV

[Kevin Arnold]

From today's Milw. Journal (and on AVS yesterday).  Now here's a scary thought:

SBC looks at buying DirecTV
Bold move would provide leverage against cable competitors
New York Times
Last Updated: Feb. 7, 2003
With its core local phone business in decline, SBC Communications has entered serious negotiations to acquire General Motors' DirecTV satellite-television operation in a deal that could be worth more than $10 billion, people close to the talks said Friday.

SBC's interest in DirecTV, the nation's No. 2 pay-television provider after the Comcast cable giant, sets SBC in direct competition with Rupert Murdoch's News Corp. Murdoch has been pursuing DirecTV for at least three years as he tries to add the United States to his global satellite empire.

In 2001, General Motors appeared to dash Murdoch's hopes by agreeing to sell its Hughes Electronics division, which includes DirecTV, to EchoStar Communications, the second-biggest satellite television company after DirecTV. Antitrust authorities in Washington, however, rejected that deal last year.

Now, News Corp. is back in negotiations with General Motors. The conventional wisdom in the media and telecommunications industries had been that Murdoch would be the only serious bidder for Hughes and DirecTV, which has almost 11 million subscribers.

Murdoch, however, must now contend with SBC, the nation's No. 2 local communications company after Verizon, and SBC's wily chairman, Edward E. Whitacre Jr. Murdoch is a business legend, but Whitacre has also proved himself an aggressive deal-maker. Since federal telecommunications laws were relaxed in 1996, SBC, formerly known as Southwestern Bell, has acquired two other Bell companies, Pacific Telesis in the West and Ameritech in the Midwest.

With its acquisition of Ameritech, SBC became - and remains - the dominant local telephone service provider in Wisconsin.

GM approached SBC
In addition to continuing his negotiations with General Motors, Murdoch also has discussed trying to acquire EchoStar, according to people close to those talks. It was unclear Friday whether News Corp. was aware of SBC's negotiations with General Motors.

In addition to SBC, Cablevision, the big cable-television carrier, and General Electric also have expressed some interest in DirecTV, according to people close to the talks. Those people said GE and Cablevision appeared far less serious than SBC and News Corp.

General Motors approached San Antonio-based SBC around the beginning of the year, trying to bring in another bidder for Hughes to compete against Murdoch, according to people close to the talks. SBC has been discussing a potential deal with General Motors since then, these people said, adding that SBC could soon begin a more intensive examination of the Hughes records and operations, a process known as due diligence.

"We have certainly been engaged in evaluating strategic options for Hughes," Toni Simonetti, a General Motors spokeswoman, said Friday afternoon. "We're looking at a number of options, but we are not in a position to comment on anything specific at this time."

Spokesmen for SBC and News Corp. declined to comment.