DirecTV hopes boost News

[Gregg Lengling]

Matthew Hart and agencies
12dec02

NEWS Corp shares rallied yesterday after the door opened for the media group to make a second tilt at Hughes Electronics Corp's US satellite arm DirecTV.


The collapse of rival EchoStar's $US18 billion ($A32 billion) merger with Hughes provides News Corp with the opportunity to finally grab the missing piece of its global satellite plans.

EchoStar, the number two US satellite television service, abandoned its proposed purchase in the face of stiff regulatory opposition to the deal which would have created a satellite behemoth across North America with 19 million subscribers.

News Corp walked away from talks to buy Hughes late last year when its offer was trumped by a last-minute bid from EchoStar.

But last month, News Corp's Fox Entertainment Group said it would raise $US1.2 billion ($A2.14 billion) in a share offer, renewing speculation it would launch a new bid for DirecTV.

News Corp shares climbed 28¢ to $11.94 yesterday, while its preferred scrip added 24¢ to $10.04.

Shaw Stockbroking research analyst Scott Marshall said investors were optimistic News Corp would be able to strike a deal with Hughes's owner General Motors for DirecTV.

He said News Corp still had a hole in the North American market for a satellite-delivered pay-TV operation and at the right price, DirecTV would strategically be a very good fit.

"Everyone expects (News Corp executive chairman Rupert Murdoch) to come back and negotiate with General Motors," he said. "General Motors itself must be under pressure to sell the asset because it has had this asset officially and unofficially on the market for something approaching three years now."

But News Corp's gains yesterday failed to inspire the broader market, which closed lower as the major banks and Telstra lost ground.