News Corp. rises on DirecTV report
By Vivian Chu, CBS.MarketWatch.com
Last Update: 12:17 AM ET Feb 7, 2001
SYDNEY (CBS.MW) - Shares of media and entertainment giant News Corp. rose sharply Wednesday after the company reportedly agreed on merger terms with U.S. satellite TV company DirecTV.
By early afternoon, News Corp. (NWS: news, msgs) shares rose 3.6 percent to 17.30 Australian dollars, after gaining as much as 4.5 percent earlier.
News Corp. and General Motors (GM: news, msgs) , whose Hughes Electronics unit owns DirecTV, have broadly agreed on a framework to combine the companies into a global satellite broadcast business valued between 60 to 70 billion dollars, the Wall Street Journal reported in its Wednesday online edition.
An agreement would likely see Sky Global Networks - which comprises News Corp's global satellite assets - merge with Hughes Electronics, which would be spun off from GM. Ultimately, Hughes would own 64 percent of the new entity, while News Corp. would own the rest.
Microsoft Corp. (MSFT: news, msgs) may also take a stake in the new company, while News Corp. would take day-to-day management control. A deal may be reached within weeks, it added.
News Corp. could not be immediately reached for comment.
Rupert Murdoch, head of News Corp., reportedly wants DirecTV, the U.S.'s biggest satellite television broadcaster, to give a U.S. presence to Sky Global Networks.
A merger between DirecTV and Sky Global would mean that a previously planned offering of Sky Global would not be necessary. Market volatility has forced News Corp. to push back the IPO date several times since last year.
News Corp. is due to post its fourth-quarter 2000 earnings Thursday.
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