NEWS CORP. AND DIRECTV CONTINUE TO WORK ON DEAL
There are questions whether News Corp. has enough money to buy DirecTV, which may not be worth $40 billion asking price, some analysts say. Industry report said News Corp. Chmn. Rupert Murdoch planned to cancel IPO of Sky Global Networks if talks with other satellite broadcasters, including DirecTV, fall through. Meanwhile, Bank of America Securities analyst Armand Musey said DirecTV’s 4th quarter financial statement might be understating subscriber acquisition costs (SACs). DirecTV denied charge. Hughes is trying to sell DirecTV unit and, despite “uncertainty,” deal now appears likely to take place “in the short term rather than the long term,” industry source said. Another source said there still were “a few bumps in the road” before deal could be completed.
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Musey said total marketing expense for DirecTV appeared to be up $110 per subscriber basis compared with 3rd quarter last year: “We believe this bolsters our thesis that the DBS business model has been deteriorating.” DirecTV spokesman said “in no way is that true.”
Meanwhile, News Corp. may choose to merge Sky Global with other publicly listed companies, Dow Jones reported. Although Murdoch has been considering buying or partnering with Hughes Electronics Corp. and DirecTV, falling stock prices around the world and lower income from TV advertising in U.S. may mean he doesn’t have the money to buy Hughes, Dow Jones said. News Corp. spokeswoman disputed that, saying. “If market conditions are right we will go ahead with an IPO [of Sky Global Networks] and as far as I'm aware there’s no change in that position.” First sale of shares in Sky Global Networks had been expected in 4th quarter 2000.