NEWS CORP.-ECHOSTAR DEAL ON HOLD DUE TO DECODER DISPUTE
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).