MCI and News Corp. will pay $682.5M for the last remaining
license for direct broadcast satellite television. They hope to
begin offering their pay service in two years, according to Mike
Mills of the WASHINGTON POST. MCI and News Corp. "still face
considerable challenges," as they must spend around $1B to start
the business. They also face established competition, including
DirecTV, USSB and Primestar. The deal seeks to combine News
Corp.'s expertise in TV with MCI's marketing skills and base of
20 million customers (WASHINGTON POST, 1/26). Some "analysts are
"skeptical," citing the high cost of the system and the
competition (Edmund Andrews, N.Y. TIMES, 1/26). Daniel Reingold,
telecom analyst at Merrill Lynch, said News Corp. could give the
service some content, "but they won't have the full panoply of
offerings customers will want." Execs at both companies say the
deal won't focus only on the "consumer market. The venture will
also seek to delver a broad array of business oriented offerings
to companies" (Mark Robichaux, WALL STREET JOURNAL, 1/26).
