News eyes Deutsche Telekom cable

Assets worth as much as $16 bil

NEW YORK — News Corp. has formally expressed interest in the cable arm of Deutsche Telekom, and insiders noted that News would clearly have to partner up for any deal as the assets could be worth as much as $16 billion.

“We’ve sent a letter indicating our interest,” a News Corp. spokesman said, as Rupert Murdoch continues to scour Western Europe with a view to expanding his holdings there. Murdoch already owns German channel TM3 as well as broadcast rights for four years to Champions League soccer. His crown jewel is a 40% stake in U.K. satcaster BSkyB.

Street disagrees

News Corp. shares drifted lower on the news as several investors complained that Murdoch “just can’t keep his wallet shut.” Murdoch is seen on Wall Street as a visionary, but one who is unwilling to sacrifice long-term strategic acquisitions for earnings and stock price considerations. And, even with partners, a Deutsche Telekom investment would be considerable.

News Corp., with annual revenue of close to $14 billion, certainly could never swallow such a deal on its own. Potential partners, and rival bidders, could include Microsoft, AT&T, General Electric, German media group Bertelsmann, a consortium led by Deutsche Bank and fast-growing U.K. cabler NTL.

As U.S. cable operators consolidate with lightning speed, Murdoch was right when he told a National Cable Television Assn. conference earlier this summer that Western Europe would be the industry’s next big stomping ground. NTL recently agreed to buy its rival Cable & Wireless, and the nation’s other major player, Telewest, is likely to make it a threesome.

France Telecom also owns a piece of NTL and Microsoft has its hands in a number of European cable pies.

News Corp.’s American depository receipts fell about 2% to $29.69.

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