Hughes Electronics chairman-CEO Michael Smith, a vocal opponent of a potential merger between Hughes and News Corp., will retire effective immediately, Hughes parent General Motors said Friday.
In the surprising reshuffle, which seems to indicate GM’s commitment to move forward with News Corp., GM vice chair Harry Pearce will become Hughes chairman. Hughes exec Jack Shaw was promoted to CEO.
Pearce declined to comment on the status of talks between Hughes, parent of satellite company DirecTV, and EchoStar, DirecTV’s smaller rival, which has emerged as another possible bidder. EchoStar is putting together an offer and said Thursday that Hughes had agreed to start talks.
Pearce reaffirmed that GM’s fiduciary duty to shareholders requires it to consider all serious proposals regarding a future restructuring “using the greatest degree of objectivity possible.”
Objectivity, at least according to many in the News Corp. camp, was somewhat lacking in Smith’s response to Rupert Murdoch’s overtures. Wall Streeters have said Smith would be the first to go if Murdoch and Hughes were to ink a deal.
In a statement, Smith said he had succeeded in transforming Hughes into an entertainment and broadband communications company and now feels “it’s time to move on.” He will retain a consulting agreement with Hughes.
“Mike Smith elected to retire. It was his decision and the Hughes board agreed,” Pearce said during a conference call. “These changes were the result of intense and comprehensive discussions among Hughes and GM management, boards and Mike, and we came together in terms of the appropriate steps we took.”
Mike Smith’s brother Jack Smith is the chairman-CEO of GM.
Asked if he thought he would continue to have a role at Hughes in the event of a sale or merger, Pearce said, “I would have to be a prophet to predict that.”
Separately, EchoStar said Friday it had priced a $1 billion bond offering. The issue will give it a cash infusion as it prepares for a potential run at DirecTV. Company said proceeds from the offering “are expected to be used for the construction, launch and insurance of additional satellites, strategic investments and acquisitions and general corporate purposes.”