News Corp. Raises Funds for Possible Satellite Bid

[Gregg Lengling]

NOVEMBER 13, 2002 -


News Corp. raised about $1.3 billion through a secondary stock offering in its Fox Entertainment Group Inc. unit, signaling that Rupert Murdoch may be laying the groundwork for a second run at satellite broadcaster DirecTV, Wednesday's Wall Street Journal reported.

Fox Entertainment, which is 85.3 percent owned by News Corp., earlier this year filed a shelf registration to raise $2.5 billion in equity or debt. Fox, which last week reported strong results for the fiscal first quarter ended Sept. 30, encompasses most of News Corp.'s entertainment assets, including the Fox movie studio, Fox TV network, cable channels such as Fox News, and investments in regional cable sports channels and professional sports teams. Murdoch is chairman and chief executive of News Corp. and Fox Entertainment.

Investors have been waiting for News Corp. to proceed with the secondary offering because many observers believe it points to News Corp. gearing up for a bid for DirecTV.

DirecTV, owned by General Motors Corp.'s Hughes Electronics Corp. unit, is under contract to be sold to rival EchoStar Communications Corp. But the Department of Justice and 23 states have sued to block the merger of the two satellite broadcasters on antitrust grounds, fueling expectations that News Corp. will attempt to buy the company after its previous offer was spurned last year by GM.

The offering, which was underwritten by Goldman Sachs, was priced at $24.75 a share. A total of 50 million shares were sold. The move won't reduce News Corp.'s stake in Fox to below 80 percent, a level it needs to maintain to continue consolidating Fox's earnings on News Corp.'s balance sheet and for tax purposes. Goldman last night was trying to resell the stock for about $25 per share.

In 4 p.m. New York Stock Exchange composite trading, Fox fell six cents to $26.61 each, and News Corp.'s American depositary receipts rose 11 cents to $25.11 each.