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News, Liberty strike share deal
By Geoff Hiscock, CNN Asia Business Editor
SYDNEY, Australia (CNN) -- Global media group News Corp has struck a deal with a major shareholder, John Malone's Liberty Media Corp, for Liberty to buy up to $500 million in News shares over the next six months. Liberty already owns about 18 percent of News, which is controlled by executive chairman Rupert Murdoch and his family. The deal gives impetus to the long-running bid by Murdoch for U.S. satellite broadcaster DirecTV, which is owned by Hughes Electronics, a unit of General Motors. News is expected to make a bid for GM's 30 percent economic stake in Hughes, rather than seeking full ownership. Under the deal announced Friday, Liberty would buy preferred limited voting ordinary shares in News at $21.50 per American Depositary Receipt (ADR). The joint announcement, released to the Australian Stock Exchange just before midday Friday, immediately sent News shares higher. They are trading up 3.17 percent at A$11.10 in early afternoon, on a day when the broader market is flat. News said that if Liberty does not exercise its right within six months, News can require Liberty to buy the stock at the same price of $21.50 per ADR if News acquires a stake in Hughes Electronics within two years. The $500 million share deal indicates that Malone is prepared to back a Murdoch bid for DirecTV. Murdoch has wanted for years to buy DirecTV to give him access to the large U.S. satellite television market and add its assets to a global broadcasting empire that includes BSkyB in the U.K. and Star TV in Asia. With 10 million subscribers, DirecTV is the largest U.S. satellite broadcaster. An earlier bid by Murdoch was thwarted in October 2001 when GM opted to sell Hughes Electronics to the No.2 U.S. satellite broadcaster EchoStar for about $26 billion. EchoStar, controlled by Charlie Ergen, has 6.7 million subscribers That sale was subsequently vetoed by regulators in late 2002, allowing Murdoch to revive his ambitions. GM owns 100 percent of the assets of Hughes and 30 percent of the tracking stock. Along with News, other potential bidders for DirecTV are SBC Communications and New York-based Cablevision Systems Corp. Murdoch's son Lachlan, deputy chief operating officer of News, said recently that either DirecTV or EchoStar would be a "great fit" for the company's business. News Corp's media assets include newspapers in Australia, the UK and the U.S., satellite broadcasters in Europe, Asia and Latin America, the Fox Broadcasting Network and the Hollywood studio Twentieth Century Fox. Liberty Media operates in video programming, broadband distribution, interactive technology and communications.
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