NEW YORK — Primestar Partners and News Corp. are expected to announce their sat TV alliance early next week, clearing the way for News Corp. to also announce its $1.8 billion acquisition of Intl. Family Entertainment Inc., sources said.
Primestar, a joint venture of the major cablers led by Time Warner Inc. and Tele-Communications Inc., has been working with News Corp. execs in recent days to iron out the last few details before the deal could be signed.
News Corp. plans to sell its ASkyB sat TV business, including a high-powered satellite license and partly built satellites, to Primestar for a nonvoting stake. The deal gives News Corp. a satellite TV presence in the U.S., but at a fraction of the cost of starting up a rival service.
Meanwhile, News Corp. is thought to have won the auction for IFE but has been holding off finalizing the deal until the Primestar deal was done. People close to the Walt Disney Co., the other final bidder for IFE, said over the past couple of days they had given up hope of winning the bidding for IFE. Neither Disney, News Corp. nor IFE would comment.
The Primestar and IFE deals are not directly linked, but News Corp. wants to guarantee distribution for its cable networks before agreeing to buy IFE, whose main asset is the Family Channel. While Family already has distribution, with about 68 million subscribers, it is not clear whether the network has any long-term carriage agreements to ensure it can’t be dropped from cable systems anytime soon.
News Corp. apparently believes a Primestar alliance will help it seal distribution for its cable networks.
News Corp. is expected to pay $1.8 billion, or $35 a share, for IFE (the company has debt of $171 million, which is included in the overall price), Wall Streeters said. IFE stock was unchanged Thursday at $31, while News Corp. stock was unchanged at $17.50.
News Corp. is expected to pay cash, although Liberty Media, which owns 22% of IFE, may opt for News Corp. stock to minimize its taxes.
News Corp. has about $2.5 billion in cash on reserve, so it easily can afford paying cash for the company, although it had told Wall Streeters earlier this year it hoped to conserve the cash. But News Corp.’s weak stock price killed off hopes that the company could offer stock for IFE to any shareholders other than Liberty.
Another News Corp. deal that was at one time linked to the Primestar agreement is News Corp.’s plan to buy Liberty Media out of the Fox Sports joint venture, sources said. That deal has not advanced, however, and won’t be done anytime soon, sources said.