Rupe and DirecTV hear an Echo

Hughes parent GM tunes into Ergen offer

NEW YORK — The nation’s favorite satellite saga took a surprising twist Sunday as EchoStar went public with a hostile $32 billion, all-stock offer to merge with DirecTV parent Hughes Electronics.

News Corp. has been trying to clinch a deal with Hughes for nearly two years and, by all accounts, was nearing the finish line. EchoStar topper Charlie Ergen had approached DirecTV, the nation’s largest satellite operator, with an offer several months ago but was rebuffed and indicated recently his intention to forgo a deal.

That’s apparently changed. In a letter dated Aug. 5, DirecTV’s smaller rival takes its case to General Motors’ board and its chairman Jack Smith.

GM, which owns Hughes, has said it would consider all legitimate offers. The automaker may review EchoStar’s proposal in a meeting on Monday.

News Corp. declined to comment Sunday on Ergen’s last-ditch effort, which is likely to at least delay Rupert Murdoch’s dream of owning a giant U.S. satellite company. DirecTV would become the centerpiece of Murdoch’s global satellite empire called Sky Global Network that includes the U.K.’s BskyB and Star TV in Asia.

Ergen’s letter notes that “During the last several months, we have discussed with representatives of both General Motors and Hughes Electronics a combination of Hughes and EchoStar that would establish the only fully competitive alternative to the powerful U.S. cable/broadband providers.

“Unfortunately, Hughes’ and DirecTV’s senior management have recently informed us that they do not intend to pursue further discussions with EchoStar. In light of the enormous benefits of our proposed combination, we are submitting this proposal directly to you for your consideration. We are confident that your shareholders will be supportive of our proposal and enthusiastic about the extraordinary potential of this combination. We note that eight of GMH’s top 10 institutional shareholders are also holders of EchoStar common stock,” he adds.

The terms of the deal call for EchoStar to offer 0.75 of its shares for each Hughes share, valuing Hughes’ stock at about $22.83 per share, an 18% premium to Hughes’ closing price on Friday. The purchase includes the assumption of $1.9 billion of Hughes debt.

Shareholders of General Motors and Hughes would own about 66% of the newly combined company. Control has been a key issue in the bargaining between News Corp. and Hughes.

EchoStar said it has identified massive synergy opportunities valued at about $37 billion for Hughes shareholders and up to $11 billion for General Motors shareholders.

General Motors said in May it had approved talks between Hughes and News Corp. EchoStar said on July 19 that it could not persuade the Hughes’ board to make a deal. Reports noted at the time that Ergen wasn’t able to raise enough cash from outside investors to pad his bid.

In fact, now he’s offering no cash at all, just stock and future opportunities.

In his letter, Ergen says, “We were prepared to structure the transaction so that General Motors would have been able to receive a significant portion of its consideration in cash… Because Hughes has indicated an unwillingness to pursue this route — and we believe the combination of EchoStar and Hughes will create tremendous value — we are now proposing an all-stock offer.”

Ergen said he is confident regulators will approve a merger of the nation’s only two signficant satellite providers and indicated that GM had expressed the same opinion even though it had nixed a deal. “After extensive review by antitrust experts, including David Boies, we are confident we can obtain such approvals in a reasonable timeframe. In our discussions with your negotiating team, we were pleased that you acknowledged that regulatory approval of our proposed transaction is likely,” he said.

Sources close News Corp. and a number of Wall Streeters believe such a combination would face intense regulatory scrutiny.

More TV

  • America Ferrera'Superstore' TV show photocall, Comic

    America Ferrera Blasts 'Send Her Back' Chant: 'Embarrassing and Shameful'

    America Ferrera has been a longtime political activist who has focused a large part of her work on immigrant rights. She’s now speaking out about the chant of “send her back” targeting Democratic Rep. Ilhan Omar that was shouted at a President Donald Trump rally earlier this week. “It’s devastating and shocking and embarrassing and [...]

  • Veronica Mars -- "Spring Break Forever"

    Kristen Bell Reveals 'Veronica Mars' Season 4 is Streaming Right Now on Hulu

    In true “Veronica Mars” fashion, Kristen Bell and co. had a pretty big twist in store for fans at the end of the show’s Comic-Con panel. The actress and her co-stars revealed that season 4 of the series is available to stream on Hulu today, as opposed to the previously announced release date of July [...]

  • Jenna Elfman as Naomi - Fear

    'Fear the Walking Dead' Renewed for Season 6 at AMC

    “Fear the Walking Dead” has been renewed for a sixth season at AMC. The announcement was made at the show’s panel during San Diego Comic-Con on Friday. In addition, it was announced that Colby Minifie, Peter Jacobson, and Colby Hollman will be joining the show. The second half of Season 5 is slated to debut [...]

  • Amy Sherman-Palladino - Outstanding Writing for

    'Mrs. Maisel' Creator Amy Sherman-Palladino Honed Her Writing Skills on 'Roseanne'

    Last year Amy Sherman-Palladino, creator of “The Marvelous Mrs. Maisel,” made Emmy history with wins for both comedy writing and directing, becoming the first woman to achieve that double. On July 16, her show, a ’50s period piece starring Rachel Brosnahan as an up-and-coming comedian in New York, was nominated for 20 Emmys, including outstanding [...]

  • James Corden

    James Corden to Develop Animated Comedy Series 'Dead Henry' at Fox (EXCLUSIVE)

    In one of the first deals this development season, James Corden has set up an animated comedy project at Fox. Titled “Dead Henry,” it is described as a buddy comedy set in the limitless but strangely familiar world of heaven, where Henry searches for the meaning of life in the afterlife. Corden is credited as [...]

  • Crypt-TV-Facebook

    Facebook Signs Deal With Crypt TV for Slate of Five Horror Series

    Crypt TV, the digital studio founded by Eli Roth and Jack Davis and backed by Jason Blum, expanded its deal with Facebook, inking a content partnership to create a slate of five horror and monster-themed series exclusively for Facebook Watch. For Facebook Watch, it’s one of the first deals for a full slate of content [...]

More From Our Brands

Access exclusive content