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DirecTV, News Corp. Sued Over Satellite Deal

Oct 19, 2004  •  Post A Comment

An investor in DirecTV Latin America sued today to block DirecTV Group and controlling shareholder Rupert Murdoch’s News Corp. from proceeding with a plan to consolidate their satellite operations in Latin America.

The suit, filed in Miami in a Florida state court by Darlene Investments, claims that the deals announced last week to combine News Corp.’s satellite operations with those of DirecTV in Brazil and other Latin American countries are the latest example of self-dealing transactions that benefit DirecTV and News Corp. at the expense of its Latin American unit.

Specifically, Darlene alleges that DirecTV and News Corp. undervalued DirecTV Latin America’s assets in order to benefit Mr. Murdoch’s company.

DirecTV and News Corp. last week said they would consolidate their Latin American satellite operations, which have competed with each other. DirecTV would control all markets except Mexico, which would be controlled by Grupo Televisa, the majority shareholder in a satellite venture with News Corp.

In addition to an injunction to block the transactions, Darlene is seeking $1 billion for what it calls fraud committed by both companies before the deal.

Darlene is controlled by Venezuelan conglomerate Cisneros Group and owns a 14 percent stake in the struggling satellite company DirecTV Latin America, with DirecTV Group owning the balance of the company. News Corp. owns a controlling 34 percent stake in DirecTV.

Darlene also accuses News Corp. and DirecTV of misleading the U.S. Bankruptcy Court and Darlene about the two companies’ commitment to DirecTV Latin America, which recently emerged from bankruptcy court protection.