News Corp. Chairman and CEO Rupert Murdoch tried to convince analysts and investors last week that he is moving on to other business in the wake of his foiled marathon effort to acquire Hughes Electronics’ DirecTV.
But in his remarks last week, Mr. Murdoch left the door open to re-enter the fray if regulators foil EchoStar’s proposed merger with DirecTV, which Mr. Murdoch appears to be encouraging based on the fact that it will create a monopolistic domestic satellite player.
“Strange things can happen at the last minute to derail the details no matter how committed the partners,” Mr. Murdoch said.
Hollywood will be the source of the stiffest legal and regulatory opposition as Fox and other program producers and distributors are concerned about the “price squeeze” a combined EchoStar-DirecTV could create for content and services.
“We think it is against the public interest; we don’t know if it will go through. The continual consolidation of the entertainment and distribution business is something that is beginning to spread some alarm among all suppliers. But all of our channels are on both DirecTV and EchoStar, so we don’t really see any problems there,” Mr. Murdoch said.
“All of Hollywood-and all content providers-are going to get increasingly worried about the mergers going on in this business. It will be very heavy if, say for instance, AOL Time Warner is allowed to merge with AT&T Broadband,” he said. “I wouldn’t be surprised to see lawsuits coming in all of this. It will be a long time before it’s done … if it’s done.”
Giving the EchoStar-DirecTV merger a 70 percent chance of going through, Mr. Murdoch said, “We’re not obsessing about it. Life is too short to dwell on it. We’re just picking ourselves up and getting on with life.”
However, much has changed since Mr. Murdoch first launched his bid for DirecTV. With the stock markets and economy weak, he conceded that plans to take Sky Global public are “on the back burner.”
“We wouldn’t want to go near this damn market with an IPO,” he said.
Although News Corp. will continue to grow its satellite operations such as BSkyB and Star TV outside of the United States, he will pursue the domestic satellite market as a content provider rather than a distributor.
Mr. Murdoch said he would take his $21 billion Sky Global satellite holdings public only if he needed to create currency to make another run for DirecTV.
Mr. Murdoch said he was stunned when, during what appeared to be eleventh-hour negotiations with General Motors’ Hughes Electronics, the tables suddenly were turned on the 18-month discussions.
“The four bankers and the two managements recommended us. The board was ready to vote for us, and they got a call from Detroit,” Mr. Murdoch said, referring to a telephone call from GM officials. “What happened still has not been explained to me.”
Mr. Murdoch said he was “shocked” by what News Corp. uncovered during due diligence on Hughes’ books. “The company had a lot of problems,” including “an inordinately high churn rate and cost base,” he said.