GM arm cuts jobs, Ergen sweetens bid
NEW YORK — Hughes Electronics, the General Motors subsid that operates DirecTV, will slash its U.S. workforce by up to 10% or 800 jobs, the company announced late Friday.
Meanwhile, EchoStar CEO Charlie Ergen has met with GM execs and agreed to pad his unsolicited, all-stock takeover bid for Hughes with cash.
The DirecTV unit of Hughes, which accounts for 3,500 jobs out of 7,900 total, is expected to bear the largest number of job losses, but officials said the exact cutbacks have not been determined.
Hughes said it would take an unspecified third quarter charge for the workforce reductions.
“We are taking these actions, and many others, to aggressively attack our cost structure and run our businesses more efficiently,” said Hughes CEO Jack Shaw in a statement that also blamed the sluggish economy for the need to make cutbacks.
EchoStar’s offer for Hughes, worth about $30 billion, is Ergen’s attempt to snatch Hughes and its crown jewel DirecTV from the arms of News Corp. The Rupert Murdoch conglom has been negotiating with GM for more than 18 months.
News Corp.’s offer hasn’t been made public, but reportedly includes $5 billion in cash and notes from News Corp., with help from investors including Liberty Media and Microsoft.
Ergen didn’t specify the cash component of his deal, but said in an interview with USA Today published Friday that he “has a high degree of flexibility” in structuring a deal. GM hasn’t begun the formal discussions needed for EchoStar to ultimately acquire Hughes and hasn’t given EchoStar a timetable for when that process can begin.
An EchoStar spokeswoman declined to comment except to say that EchoStar remains “in communication” with GM. The automaker is examining the No. 2 satcaster’s Aug. 5 bid, which appears to have thrown a wrench into the News Corp.-GM talks.
Murdoch and News Corp. chief operating officer Peter Chernin said several weeks ago they are still optimistic an agreement will be reached soon.
EchoStar shares surged 4.4% Friday to close at $28.93. Shares of News Corp. were up 1.5% to $34.66 and Hughes, a tracking stock of GM, firmed 0.32% to $19.65.