DirecTV Bids May Be This Week

[Gregg Lengling]

NEW YORK - You've heard it before: By the end of this week, "final offers" for DirecTV are expected to be submitted that could finally bring to a close a deal that's been in play for years.

"I think this will get done within the week," says Janco Partners analyst Matthew Harrington. "[The companies involved] realize that this is the time to do it. With shares of DirecTV owner Hughes Electronics trading barely over $10, it's really undervalued."

     
Also pressing things forward was the fact that according to analysts, General Motors (nyse: GM - news - people ), parent of DirecTV owner Hughes Electronics (nyse: GMH - news - people ), told shareholders it would show real progress on the deal by early April or next week. GM originally announced its plan to sell the unit in mid-2000.

Both Liberty Media's (nyse: L - news - people ) John Malone and News Corp.'s (nyse: NWS - news - people ) Rupert Murdoch are expected to bid for the second-largest satellite TV outfit in the U.S., but it's anybody's guess as to whether they'll go after DirecTV together or separately. On Monday, Malone said he hasn't ruled out teaming up with Murdoch, despite a report several weeks ago that had the two media moguls parting ways.

"Liberty is a 20% shareholder in News Corp., so if Liberty wants in on the deal News Corp. should let Liberty in," says Columbia Management's portfolio manager Ajay Mehra. Although there could be some regulatory hurdles if the two teamed up, analysts agree that there are ways to work around this. In order to prevent a bidding war, this would make the most sense.

SBC Communications (nyse: SBC - news - people ) also has indicated interest in DirecTV, but because its telecom business badly needs tending to and television distribution is unknown territory, it's a long shot.

Fanning the speculation of imminent solid offers were separate financing moves by Liberty and News Corp. last week. Liberty sold $1.5 billion in bonds exchangeable for AOL Time Warner (nyse: AOL - news - people ) shares, while News Corp. issued a bond for the same amount convertible into shares of British Sky Broadcasting.

Investors are hoping that Malone may give some indication of his plans today at 5 P.M. ET when Liberty has a conference call scheduled to discuss "fourth-quarter supplemental financial information." In addition to his interest in DirecTV, Malone is mulling buying the rest of QVC, which is joint venture between Liberty and and Comcast (nasdaq: CMCSA - news - people ), and possibly some of Vivendi Universal's (nyse: V - news - people ) entertainment assets.

When bids are submitted they will supply some clues as to how a DirecTV sale will be structured, which has been speculated about for as many years as GM has been trying to sell the unit. After GM recently contributed $1.5 billion in stock to its ailing pension plan, its stake in Hughes' tracking stock has shrunk to 20% from 30%, although it still owns all the subsidiary's assets.

So while Liberty and/or News Corp. may buy that controlling stake for a price that's speculated to be anywhere between $3 billion and $7 billion, GM also could spin off the Hughes assets entirely. That was the plan with DirecTV's merger with EchoStar (nasdaq: DISH - news - people ), until the U.S. Federal Communications Commission shot it down in October.

Each party involved is no doubt hoping that this umpeenth round of bids will be the one that actually leads to a DirecTV sale.