You will be redirected back to your article in seconds

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

  • Walt Disney Archives Founder Dave Smith

    Walt Disney Archives Founder Dave Smith Dies at 78

    Walt Disney Archives founder Dave Smith, the historian who spent 40 years cataloging and preserving the company’s legacy of entertainment and innovation, died Friday in Burbank, Calif. He was 78. Smith served as Disney’s chief archivist from 1970 to 2010. He was named a Disney Legend in 2007 and served as a consultant to the [...]

  • TV Writer Christopher Knopf, Former WGA

    TV Writer Christopher Knopf, Former WGA West President, Dies at 91

    Prolific Emmy-nominated television writer Christopher Edwin Knopf, former president of the Writers Guild of America West, died in his sleep of congestive heart failure on Feb. 13. He was 91. Knopf was born in New York and attended UCLA, leaving during his senior year to join the Air Force during World War II. He finished [...]

  • Jussie Smollett The Black AIDS Insitute

    Jussie Smollett Case: Two Suspects Released Without Charges as New Evidence Emerges

    After two days of questioning, the Chicago Police Department announced Friday evening that it has released two suspects in the Jussie Smollett case without filing charges. Police spokesman Anthony Guglielmi said that detectives had developed new information in the case. Police no longer consider the men to be suspects. “Due to new evidence as a [...]

  • GOTHAM: L-R: Guest star Cameron Monaghan

    TV News Roundup: Fox Drops 'Gotham' Final Season Trailer (Watch)

    In today’s TV news roundup, Fox released a new trailer for an upcoming episode of “Gotham” and Disney has announced the cast for its upcoming “High School Musical” series.  FIRST LOOKS Showtime released a new trailer and the official poster for the upcoming fourth season of “Billions,” premiering March 17 at 9 p.m. ET/PT. In [...]

  • Chris Rock

    Chris Rock to Direct Kenan Thompson Comedy Pilot at NBC

    Chris Rock has come onboard to direct the NBC single-cam comedy pilot “Saving Kenan,” Variety has learned. Rock will also executive produce the pilot, which stars “SNL” mainstay Kenan Thompson. Thompson will play a newly widowed dad determined to be everything for his kids while begrudgingly letting his persistent father-in-law become more involved in their lives [...]

  • Peak TV Saturation TV Placeholder

    Apollo Global Management Buys Majority Stake in Cox TV Stations

    Private equity giant Apollo Global Management has cut a deal with Atlanta-based Cox Enterprises to buy a majority stake in Cox’s 13 TV stations as well as three newspapers and a handful of radio stations in Ohio. Apollo has been in the hunt for broadcast TV stations for some time. Cox’s station group, which includes [...]

  • Ken Jeong TV Take Podcast

    Listen: Ken Jeong on His Return to Stand-Up and New Netflix Special

    Welcome to “TV Take,” Variety’s television podcast. In this week’s episode, Variety’s executive editor of TV, Daniel Holloway, talks with Ken Jeong about his Netflix comedy special, “Ken Jeong: You Complete Me, Ho,” and being a judge on Fox’s “The Masked Singer.“ Jeong started working on his new standup act after ABC canceled his show “Dr. [...]

More From Our Brands

Access exclusive content