Q3 loss won't stop News Corp.'s $6.6 bil plan
HOLLYWOOD — Rupert’s deal is moving ahead, and an accounting-prompted loss at Hughes Electronics last quarter will prove just a hiccup, execs at the DirecTV parent said Tuesday.
Hughes said its third-quarter loss widened — to $23 million from year-earlier red ink of $14 million — on writedowns of Latin American operations.
But DirecTV’s U.S. satcasting operations continued to drive Hughes’ biz fundamentals with substantial customer gains. That was good news for Rupert Murdoch, whose News Corp. is striving to complete a $6.6 billion purchase of a controlling 34% stake in El Segundo, Calif.-based Hughes as a linchpin to the media conglom’s global distribution strategy.
Hughes CEO Jack Shaw said he expects the stock- and cash-based deal to close by year’s end. That repped further positive news, as the FCC recently stretched its study of the plan by “stopping the clock” on a planned 180-day review to coordinate with Justice Dept. scrutiny of the transaction.
“We see this as a routine, sort of momentary delay,” DirecTV chief exec Eddy Hartenstein said in a conference call held with press and analysts to discuss the financial results.
DirecTV hasn’t been notified of any specific new info regulators might need to complete their reviews, Hartenstein said.
DirecTV added 326,000 U.S. subscribers in the latest quarter for a total of 11.9 million subs, with officials citing the popularity of its NFL Sunday Ticket pro football package and increased demand for local channels. The satcaster expects to add almost 1.1 million U.S. subs in 2003.
Hughes reported an overall 17% increase in third-quarter revenue to $2.57 billion.
The company’s writedowns of satcasting operations in Venezuela and Puerto Rico were prompted by changes in accounting rules requiring Hughes to recognize declining values of companies in which it holds minority stakes. Excluding the $64.6 million in writedowns, Hughes earned $41.6 million in the latest quarter, officials said.
Hughes also owns an 81% stake in U.S. commercial satellite operator PanAmSat, whose profit rose just over 1% to $21 million in the latest quarter, officials said.
Revenue rose almost 6% to $210.1 million at the Connecticut-based company.
Hughes’ financial results were roughly in line with Wall Street expectations. But its shares — which trade as a tracking stock of current controlling owner General Motors — were off 8¢ at $15.30 in mid-session trading Tuesday.
News Corp. stock was up 10¢ at $34.62 in midday activity.