DETROIT, March 23 (Reuters) - Shares of General Motors Corp. (NYSE:GM - news) jumped
6 percent on Thursday after a report that Rupert Murdoch's News Corp. (NYSE:NWS - news)
and AT&T Corp.'s (NYSE:T - news) Liberty Media (NYSE:LMGa - news) were interested in
buying the automaker as a way to capture GM's Hughes Electronics Corp. (NYSE:GMH -
news)
The report near midday on the CNBC business news channel said News Corp. had enlisted
investment bankers to look into buying GM because of the value of Hughes' satellite TV
business, DirecTV. GM's automotive business might then be spun off into a separate company.
News Corp. -- a worldwide media and entertainment company run by Murdoch -- denied the report outright. GM, the world's
largest automaker, declined to comment.
``The report that News Corp. is engaged in talks with GM, investment bankers and third parties about buying GM Corp. is entirely
false and without merit,' said Andrew Butcher, a spokesman for News Corp. in New York.
Said GM spokesman Tom Kowaleski: ``We're not commenting on any kinds of rumor or speculation.'
DirecTV is the largest digital television entertainment service provider in the United States, with more than 8.2 million subscribers
there and 1 million more in other countries.
News Corp's media properties include newspapers such as the Times of London and the New York Post, the 20th Century Fox
studios, the Fox television network, and cable and satellite TV properties around the world.
Last month, News Corp. said it was considering a consolidation and relaunching of its disparate satellite holdings into a new
company, dubbed Platform Co., to unlock hidden value in the global media empire.
Even so, analysts generally dismissed the idea that News Corp. could swallow the auto giant. GM generated 1999 revenues of
$176.6 billion, compared with News Corp.'s fiscal 1999 revenues of nearly $14 billion. GM's market value, after the stock run-up
on Thursday, was $53.9 billion, based on the number of outstanding shares at the end of February. News Corp.'s market
capitalization was about $58 billion.
``There's less than a 5 percent chance that this happens,' said David Garrity, an analyst at Dresdner Kleinwort Benson Securities.
Still, Garrity and other analysts said talk about various suitors for DirecTV kept cropping up. One analyst who asked not to be
named said there had been interest in buying DirecTV ``for a long time.'
But GM would only divest the unit if it could find a tax-free way to do it, and only if it could receive proceeds in cash. Also, GM
Chairman Jack Smith would have to be convinced of parting with the satellite business, which GM likes because of the potential for
linking with vehicle electronics.
Nevertheless, the analyst said, ``Where there's smoke, there's fire.'
William Kidd, an analyst with C.E. Unterberg, Towbin, said in a research note that a News Corp. acquisition of Hughes would
make sense because News Corp. is already one of the world's leading satellite providers, except in the United States. The satellite
ventures include Asia's Star TV, Sky Latin America, Japan Sky B and BSkyB, Italian pay-TV network Stream, Germany's
Premier and Foxtel in Australia.
``News Corp.'s Sky and Star TV assets, coupled with DirecTV, would make for a formidable combined entity,' he said in the
report.
GM's stock finished 5-1/4 higher at 87 on the New York Stock Exchange, a little lower than its 52-week high of 94-7/8. Shares of
GM Hughes (NYSE:GMH - news), a separate stock that tracks the performance of the GM's communications assets, rose
11-7/16 to 135-7/8, a new year-high. News Corp's stock fell 1-3/4 to 61-7/16.
Last month, in response to Wall Street pressure to unlock more of the value in Hughes, GM's board unveiled a plan under which
investors could exchange $8 billion of their shares in the parent company for the greater growth potential of the high-tech Hughes
unit. The plan was increased to $9 billion as part of GM's alliance with Italy's Fiat S.p.A. announced earlier this month.
At the time, GM said it had no current plans to spin off or split off the Hughes unit. Even so, the automaker said it would keep
evaluating the ownership structure of Hughes, whose DirecTV satellite television business is expected to generate $5 billion in
revenues this year. |
