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With Hughes deal on hold, Murdoch hearing an Echo

No plans to sweeten previous offer, insider sez

NEW YORK — News Corp. chairman-CEO Rupert Murdoch has asked to meet with the boards of DirecTV parents GM and Hughes Electronics in a last-ditch effort to move ahead with a satellite merger. Meanwhile, as expected, he’s exploring a deal with DirecTV’s smaller rival Echostar, sources said Thursday.

Murdoch “isn’t walking away,” said one insider, but he doesn’t plan to sweeten the offer that Hughes CEO Michael Smith and some Hughes shareholders didn’t find acceptable the first time around.

Murdoch has had several conversations with Echostar topper Charlie Ergen. It’s still very early, but News Corp. may take a big, but not controlling, stake in Echostar in exchange for shares of Sky Global Network. Sky houses News Corp.’s worldwide satellite assets, which lack a U.S. component.

Hughes still wants more of a premium than News Corp. is offering. But a premium nowadays, with today’s troubled markets, is in the eye of the beholder. Shares of Hughes, a tracking stock of General Motors, hit a 52-week high of $47 about a year ago. Now they’re trading at under $20. There also are issues of control.

Hughes shares dipped 6.6% to $19.70 Thursday, largely, Wall Streeters said, due to speculation that News Corp. may walk. What they couldn’t figure out is why Echostar shares fell as well, closing down 4.9% at $26.69.

IPO delayed

News Corp. and GM have been in talks for months, and News Corp. originally held up the initial public offering of Sky Global Networks to see how things developed.

In the current lax regulatory environment, some have speculated that DirecTV may seek to hook up with Echostar itself, although that’s highly unlikely to pass muster even with a Republican FCC. GM could also spin off Hughes entirely, or Hughes could seek another partner, although no one nearly as eager as News Corp. has emerged so far.

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