GM sets talks between Hughes, Sky Global
NEW YORK — General Motors broke its silence on the future of DirecTV, announcing May 1 that it has given the greenlight to serious and immediate merger talks between its Hughes Electronics unit and News Corp.’s Sky Global Network.
Discussions, which have stalled lately, had been ongoing for months but were never officially acknowledged by either GM or Hughes, which owns satcatser DirecTV. The automaker always maintained it was considering various alternatives, although no other serious bidders seem to have emerged.
Now, a deal with News Corp. appears a strong possibility, given how badly Murdoch wants DirecTV and the fact that he’s agreed to sweeten his original offer to make it more palatable to Hughes’ chairman and shareholders, and thus to GM.
“After review by the board of Hughes and as part of their evaluation of strategic restructuring alternatives, the GM board of directors has authorized proceeding with further discussions” with News Corp., GM said in a statement.
A GM spokeswoman said the parties won’t waste any time getting down to business and are hopeful for a swift resolution. There are already teams and “a well defined process” in place, she said.
The Hughes board met April 30 and was encouraged by the revised offer. The GM board gathered May 1 at a regularly scheduled meet to examine the new proposal, which has News Corp. taking a reduced 30% instead of 35% of the merged entity, worth an estimated $70 billion.
With the previous round having ended in failure, however, GM remained cautious. “There can be no assurance that the parties will reach an agreement regarding such a transaction, or, that if an agreement is reached, any conditions to the transaction would be satisfied or that a transaction would be consummated,” it said.
Deal would combine DirecTV with Sky Global Networks, which lacks a U.S. component. Murdoch has bundled all of his satellite ventures, including BSkyB and Star TV in Asia, into Sky Global in an effort to create a new digital, worldwide distribution platform.
Separately, DirecTV chief financial officer Bob Meyers at a conference last week reiterated some bullish financial projections and said the satcaster aims to boost subscribers to 15 million in five years from just under 10 million currently.
Meyer also said he expects DirecTV cash flow to rise to between $325 million and $425 million this year from $151 million the year before.