Topper to make another pitch with Hughes

The meeting that Wall Street has been waiting for between Rupert Murdoch and the General Motors board is set to take place today as the News Corp. topper wings it to Detroit to make another pitch for a deal with GM’s Hughes Electronics.

A month ago, Murdoch sent GM a letter asking to meet with the board directly (Daily Variety, March 16). He was attempting to bypass Hughes and its chairman-CEO Michael Smith, who was less than enthusiastic about Murdoch’s proposition for a merger between Hughes and News Corp.’s satellite division Sky Global Networks.

Hughes owns DirecTV, the nation’s biggest satellite broadcaster.

News Corp. insiders continue to insist that Murdoch will not sweeten his offer beyond the terms proposed last year in a handshake deal with GM and its chairman John Smith Jr. The two Smiths are brothers.

Talks foundered, but neither side completely walked away. Now Murdoch has the chance to revive a possible combination. Microsoft is on hand as a partner to invest several billion dollars in the company that would emerge from a Sky Global/Hughes deal. News Corp. insiders promise the media and entertainment conglom won’t borrow huge amounts of cash and rack up debt in order to clinch a deal.

Stock rise fuels Hughes

With the market possibly turning up, a longer lead time may benefit Hughes. The stock has advanced from a 52-week low of $17.50 on April 4. Now the shares are trading at about $22. The premium Hughes was seeking won’t be as hard to justify if the stock keeps rising.

News Corp., meanwhile, has floated the idea of a deal with DirecTV’s smaller competitor Echostar instead and has talked of moving forward with a solo initial public offering of Sky Global if the market holds steady.

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