GM investors OK Hughes sales to News Corp.

$6.6 billion deal set to close by the end of the year

News Corp.’s pending purchase of DirecTV parent Hughes Electronics moved one step closer Monday as General Motors shareholders gave a resounding thumbs up to the deal that will cede GM’s 19.8% stake in Hughes to Rupert Murdoch’s media conglom.

News Corp. will purchase a further 14.2% of Hughes stock from former GM Class H stockholders.

GM said more than 94% of voting shareholders of GM and Hughes common stock approved the $6.6 billion deal, which will be tax-free under IRS rules. Deal is due to close by the end of the year, following final regulatory clearances by the Federal Communications Commissions and Justice Dept.

Need for cash

GM has been under pressure to raise cash to finance its underfunded pension scheme.

Hughes recently upped its forecast for subscriber and revenue growth for the third quarter and full year 2003, citing stronger-than-expected uptake of its NFL sports packages, slightly lower churn rates as well as a good response to its local channel offerings.

Company expects to add 320,000 owned and operated subs in the third quarter and 1.05 million net new subs for the year.

Analysts are optimistic about DBS prospects for 2004 as well given price increase pressures on comparable digital cable subscriptions. Some investors, however, are concerned that under Murdoch, short-term margins could suffer as News Corp. spends heavily to increase sub growth and add new churn-reducing features.

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