The FCC?s refusal to approve Echostar?s acquisition of DirecTV in the United States, announced Thursday, October 10, gives Rupert Murdoch the chance he wanted to resume the planned merger of Sky and DirecTV. Seasoned observers believe News Corp. will be the only candidate to buy DirecTV if General Motors still wants to sell. The situation could turn out to be more complex, however, especially in Latin America. Asset values and credit have changed considerably worldwide since Echostar made its winning bid for DirecTV, taking News Corp. out of the dispute. Secondly, Echostar itself is now stronger than it was before it applied to the FCC and this may have diminished News Corp.?s interest in a deal. In Latin America News Corp. will probably wait to see how willing GM is to invest in local operations. Analysts believe it will be some time before the situation is clarified in terms of who will gain control of the market. As for local shareholders in DirecTV and Sky, their positions are also different now. News Corp. has worked out an agreement with Globo and Televisa regarding their potential participation in the event of a merger but its terms could have to be reformulated if News Corp. resumed negotiations with DirecTV. Some points will probably be retained, analysts believe, including a guarantee for distribution of Globo?s content, but others might not. It?s worth recalling that Sky recently pulled out of Argentina, most Latin American economies are in difficulties, and Globo has reduced its stake in Sky Brazil.
DBS
