Sky plans stalled

Murdoch sez Hughes deal may spike satcaster IPO

By JILL GOLDSMITH

Murdoch

NEW YORK -- News Corp. chairman-CEO Rupert Murdoch said his company may not need to move ahead with a planned IPO of Sky Global Networks since it's more likely the satcaster would be merged into an existing public company, such as Hughes Electronics.

"We have to conclude these conversations with these American satellite broadcasters and see whether we can effect a merger with our interests around the world and interests here. If that happens, there may not be an IPO because we might be merging existing public companies," Murdoch said in an interview for CNBC Australia that will be aired today.

News Corp. is in the latter stages of hashing out a deal to buy Hughes and its DirecTV satellite business from parent General Motors. DirecTV would add a crucial U.S. component to Sky Global, whose satellite assets span much of the rest of the world. Murdoch's reference to "public companies" implies that DirecTV rival EchoStar, also publicly traded, might be another potential merger partner. However, the larger DirecTV is almost certain to be the final destination.

It is much easier and less expensive to merge a private company into a company that is already publicly traded than to launch an initial public offering from scratch, especially given the current rocky state of financial markets.

Parent GM, suffering with the rest of the industry from a steep drop in auto sales, is under pressure from Wall Street to unlock the value of its 30% stake in Hughes.

Hughes is valued at about $40 billion. Wall Streeters figure News Corp. and GM could wrap up a deal in about six weeks.

If the talks with U.S. satcasters don't succeed, Murdoch said News Corp. would follow through with its original plan of an IPO for Sky Global.

Murdoch is also in the process of negotiating with Haim Saban, who exercised an option in December that obligates News Corp. to buy out his 50% of jointly owned Fox Family Entertainment. He apparently values the stake at $2 billion.

"Whatever turns out there, we will either do something we can afford and take it over or we would sell the whole lot," Murdoch said.

"At this stage, it would certainly be our intention to keep it and to develop it. But there's certainly no shortage of people interested in either being our partner and replacing Mr. Saban or in taking the whole business."

Wall Streeters say it might be impossible for News Corp. -- or any media company -- to part with a fully distributed cable network. They agree there would be plenty of offers to buy the whole net, but less enthusiasm at being a 50-50 partner.

"We have to go through a process taking some months and I can assure you that our partner's publicity agent talking about $2 billion is a long, long way off the mark," Murdoch said.