EchoStar Communications Corp., gearing up for an all-out public-relations battle over its $29 billion unsolicited bid for Hughes Electronics Corp., hopes to sway Wall Street, individual investors and even members of Congress by portraying a rival proposal from Australia’s News Corp. as a threat to U.S. consumers, Wednesday’s Wall Street Journal reported.
Even as EchoStar (DISH) Chairman Charlie Ergen prepares to make the broader antitrust argument that News Corp.’s (NWS) growing clout in satellite broadcasting, network television and movies could chill competition and lead to higher prices, the board of Hughes’s parent, General Motors Corp. (GM), met yesterday but maintained its public silence as it mulled its options.
GM spokeswoman Toni Simonetti declined to comment on the details of the meeting, sticking to GM’s previous position that it will consider “any bona-fide proposals, including the EchoStar proposal,” although GM is in advanced negotiations with News Corp. and had hoped to have a Hughes deal wrapped up by now.
GM owns 100% of the assets of Hughes (GMH), best known for its industry-leading DirecTV satellite-TV service, but only about 30% of the tracking stock. GM rejected a private offer from EchoStar, the country’s No. 2 satellite-to-home broadcaster, earlier this year, concerned that going ahead with a deal with an uncertain regulatory outlook would be too risky.
At issue is whether regulators will allow the top two satellite broadcasters to merge. EchoStar argues that even when combined, the two companies will have a small share of U.S. viewers when compared to the cable TV companies. As part of his campaign, Mr. Ergen met with a number of large Hughes and EchoStar holders yesterday.
Though its current share price means that EchoStar’s offer no longer carries an 18% premium, the satellite broadcaster is offering a small premium to Hughes shareholders. When it was unveiled Sunday, the deal was valued at about $30.4 billion.
But now, selling the News Corp. deal to the holders of Hughes tracking stock, who must approve any transaction, could turn out to be significantly more complicated.
Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved.
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