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NEWS CORP.-ECHOSTAR DEAL ON HOLD DUE TO DECODER DISPUTE
Published April 29, 1997
Rupert Murdoch's $1B bid to purchase EchoStar Communications and turn ASkyB into a "satellite power" is running into "heavy weather," according to Brooks Boliek of the HOLLYWOOD REPORTER. Murdoch's News Corp. and EchoStar delayed their applications for regulatory approval "because there are disagreements that remain to be worked out." By combining EchoStar and ASkyB, News Corp.'s satellite TV business, Murdoch "hoped to create a deep-pocketed No. 3 competitor to industry leaders DirecTV and Primestar." EchoStar, in a release: "There can be no assurance that News Corp. will proceed with an investment in EchoStar." News Corp. spokesperson Jim Platt: "There won't be any filings until we have certain business issues resolved" (HOLLYWOOD REPORTER, 4/29). In N.Y., Mark Landler notes the "sticking point" is that EchoStar does not plan to equip its subscribers will a satellite decoder system made by News Corp. EchoStar "was told" that unless it "dropped" its system in favor of News Corp.'s, the investment would be cancelled (N.Y. TIMES, 4/29). In D.C., Paul Farhi notes speculation that Murdoch and EchoStar CEO Charlie Ergen "were fighting over control" or that Murdoch "was having second thoughts about the financial commitment," which could reach up to $5B over several years (WASHINGTON POST, 4/29). TC-BYE-BYE? The TIMES' Landler notes a source who said that Murdoch might be seeking to "swap partners" from EchoStar to TCI Inc., which has a 21% stake in Primestar. But pulling out of the EchoStar deal "could prove costly," since terms call for News Corp. to purchase $200M worth of EchoStar shares or to invest $200M in the company, "if the transaction does not close by May 1" (N.Y. TIMES, 4/29). PRIMED FOR BATTLE: Primestar is "putting the finishing touches on a major reorganization" designed to help cable companies challenge rivals such as DirecTV and EchoStar, according to USA TODAY's David Lieberman. Under the new arrangement, Primestar, the No. 2 satellite provider, would be transformed into a unified company with a national pricing and marketing plan. Primestar would be "folded into" TCI Satellite Entertainment. TCI would own about 38% of the equity; Time Warner about 30% (USA TODAY, 4/29).