Hughes Shoots Down News Corp. Deal Terms
By Bob Tourtellotte
LOS ANGELES (Reuters) - Hughes Electronics Corp. (NYSE:GMH - news) Chairman Michael Smith on Thursday shot down News Corp. Ltd's (NCP.AX) reported offer to acquire Hughes, calling it undervalued, and he strongly defended himself against reports that he put personal interests ahead of his shareholders'.
``(The deal) is not as good as what's been in the papers. It doesn't make any sense to us, and we won't do that deal,'' Smith told financial analysts at a Morgan Stanley conference in New York. ``It's as simple as that. There's not enough value in the deal. End of story.''
Hughes, owner of the highly-coveted DirecTV pay television satellite service, and its parent General Motors Corp. (NYSE:GM - news) have been negotiating to sell Hughes to News Corp. for months, but talks have yet to lead to a signed deal.
If billionaire Rupert Murdoch's News Corp. were to buy Hughes, it would group the new asset with its own satellite TV services like BSkyB in Britain, StarTV in Asia and SkyPerfecTV in Japan to form a $70 billion global satellite TV provider.
Since news that a deal was imminent first broke into newspapers in February, reports have speculated that News Corp. would offer its stock in the deal, while partner Microsoft Corp. would invest $4 billion to $5 billion and cable TV company Liberty Media Corp. would invest $1 billion.
The new company would reportedly be 65-percent owned by Hughes existing shareholders and 35 percent owned by the News Corp. entities. But Smith, reportedly, has been arguing for a 30 percent stake for News Corp.
Moreover, News Corp. Chairman Murdoch would be chairman of the new company and News Corp. management would control it.
News Corp. shares were down about 2.5 percent in Sydney trade to A$15.67, extending a five-week downturn in the stock.
Because of the global synergies, News Corp. has been seen as the only buyer interested in Hughes, but Smith said other parties are talking about a deal, too.
``The stuff you read about 'the only deal in town,' is simply not true,'' he told analysts and investors. But he declined to name names.
He also sought to throw cold water on news reports that speculated he was putting his personal ambition for control of the new company ahead of shareholders' best interests.
``This is a premise that's absolutely false and untrue,'' he said.
Still, Smith said he was ``absolutely confident'' a deal can be worked out in some form ``in short order.''
Later, in a statement, GM and Hughes said they continue to explore all their options to boost shareholder value for Hughes, including a possible spin-off to shareholders, outright sale, or nothing at all.
The company has made similar statements in the past, and a GM spokesman told Reuters the company issued the statement to comply with federal rules over fair disclosure of information.
A News Corp. spokesman told Reuters that negotiations between the companies are continuing.
``I know progress has been slow, but they are continuing,'' said spokesman Andrew Butcher.
Company officials declined to comment on possible other parties, but past news accounts have mentioned media giant AOL Time Warner Inc (NYSE:AOL - news). That combination, and another reported tie-up with U.S. cable operator Comcast Corp (NasdaqNM:CMCSK - news), however, seem unlikely because they would raise anti-trust issues.
Entertainment giant Walt Disney Co. (NYSE:DIS - news) has also been speculated about as a possible partner for DirecTV, but sources who know of Disney plans say a merger is not in the works.
In the past, a Disney spokesman declined comment on the rumors, citing company policy in such matters, and he was not immediately available on Thursday. |
