(FORTUNE Magazine) – You can't blame the telcos for dreaming about Hollywood. What would you rather do--hang out at the Oscars or bundle local, long distance, and DSL?

So it's not surprising that SBC, the regional Bell based in San Antonio, is eyeing DirecTV, the satellite TV company owned by Hughes Electronics (itself a unit of General Motors). But if SBC decides to make a play for DirecTV, it will have to outbid News Corp., whose chairman and CEO Rupert Murdoch has coveted a U.S. satellite platform for years. (See "Murdoch's Prime Time" on fortune.com.)

News Corp. has vowed not to get into a bidding war. Currently Hughes, a tracking stock of GM's, is valued at about $9.6 billion (vs. $32 billion when GM first put it up for sale in 2000). But Murdoch has a history of paying top price to get a deal done, sometimes to his benefit (the Fox studio, Star TV) and other times not (Gemstar, TV sports rights). DirecTV, with its 11 million subscribers, would complement his satellite platforms in Europe and Asia and, more importantly, guarantee that his Fox programming would be available throughout the U.S., no matter what rival cable operators have to say.

SBC is worried about cable too. Its plan would be to add DirecTV to the bundle of local, long-distance, high-speed Internet, and wireless services that it currently offers customers. SBC sells those packages, called Total Connections, for about $90 a month and is the No. 1 provider of DSL in the U.S.

But history suggests that when telcos try to do TV, they rarely succeed. AT&T couldn't manage cable systems. SBC itself shut down Tele-TV, a joint venture of three telcos that was supposed to provide interactive TV, after it acquired Pacific Telesis in 1997. SBC also sold off the cable systems that came with its acquisitions of Ameritech and Southern New England Telecommunications. Wall Street had a lukewarm reaction to the idea of an SBC-Hughes merger, and the telco's stock has slipped since talks were first reported on Feb. 7.

What's more, SBC previously had an agreement with DirecTV to sell the satellite service to its phone customers. It now has a similar agreement with DirecTV's rival Echostar. So it can already bundle TV and phone service. Says Blair Levin, a Washington telecom analyst with Legg Mason: "I don't know what efficiencies they gain by buying DirecTV that they don't get with joint marketing agreements." A backstage pass to the Oscars, perhaps? --Marc Gunther