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GM to decide on Hughes soon
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October 24, 2001: 12:56 p.m. ET
Bidding war for DirecTV could end soon; GM board may meet this weekend.
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NEW YORK (CNNmoney) - Shares of News Corp. rose Wednesday on reports that the media company's negotiations with General Motors to buy Hughes Electronics Corp. may finally come to an end.
GM's board could meet as early as this weekend and seal a deal to sell Hughes, which owns DirecTV, the Wall Street Journal reported. Both Rupert Murdoch's News Corp. and EchoStar Communications Corp., the No. 2 U.S. satellite television provider, are vying for control of DirecTV network.
Shares for News Corp. (NWS: up $0.57 to $28.97, Research, Estimates) gained nearly 2 percent in early afternoon trading Wednesday, GM (GM: up $1.85 to $45.00, Research, Estimates) dropped minutely, and Hughes (GMH: up $0.12 to $15.31, Research, Estimates) gained nominally. EchoStar's (DISH: down $0.92 to $25.15, Research, Estimates) stock shed more than 4 percent.
GM's board does not have a regularly schedule meeting set any time soon, spokeswoman Toni Simonetti said. However, she declined to comment on whether a special meeting would be called.
GM is still in very active negotiations with both News Corp. and EchoStar, Simonetti said.
There is wide dissension within GM and Hughes regarding which bid to pick but News Corp. appears to have the edge, according to a report in the Wall Street Journal. GM has been in negotiations with News Corp. for nearly a year and the deal reportedly offers little if any premium. But a News Corp.-Hughes combination would be easier for regulators to swallow.
In contrast, Echostar's $27 billion offers a sizeable premium but would be a tough sell to regulators. Comments from EchoStar Chairman and CEO Charlie Ergen have also pushed sentiment toward a News Corp. win. Ergen, on a conference call discussing third quarter earnings Tuesday, said that talks continue with GM and Hughes. But Ergen attempted to prepare investors for the possibility that EchoStar may lose the bidding war.
"Regardless of the outcome, we are well-positioned as a company," Ergen said.
Echostar declined to comment.
Last week, Hughes CEO Jack Shaw said negotiations with both EchoStar and News Corp. were entering the "home stretch."
Littleton, Colo.-based EchoStar is offering 0.75 a share for each share of the tracking stock of GM-owned Hughes. EchoStar is also lining up $5.5 billion in financing from UBS Warburg and Deutsche Bank AG.
Combining EchoStar and Hughes, the top two satellite companies, will likely pique regulatory scrutiny, since the Federal Trade Commission is apparently now taking a hard line on mergers. On Tuesday, the FTC authorized its staff to block the joint $8.15 billion acquisition of Seagram's drinks business by Britain's Diageo PLC and France's Pernod Ricard.
The agency cited competition concerns since Seagram and Diageo are the No. 2 and No. 3 sellers of rum in the U.S., following leader Bacardi U.S.A.
Hughes declined to comment. 
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