DirecTV shake-upHughes' Smith abruptly 'retires' after stifling Murdoch deal 5/27/2001 08:00:00 PM Eastern
The chief executive of DirecTV parent Hughes Electronics, who opposed the company's sale to Rupert Murdoch, left suddenly Friday, a day after DBS player EchoStar Communications got into the action.
Mike Smith, brother of Jack Smith, chairman of Hughes' parent General Motors, announced his immediate retirement after 16 years at GM.
Smith has openly criticized News Corp. Chairman Murdoch's attempts to buy Hughes, saying his offers haven't been very impressive. Murdoch wants to merge it into his international satellite unit, Sky Global, and would pay cash. Murdoch has blasted Smith for supposedly trying to save his job.
Smith's replacement, GM Vice Chairman Harry Pearce, would say only that "these changes were the result of intense and comprehensive discussion among GM, Hughes, the boards and Mike."
Smith's exit came a day after its was revealed that GM had reached out to EchoStar Chairman Charlie Ergen about a counteroffer. Ergen suddenly borrowed $1 billion last week, raising his checking account to $2.3 billion. But GM, which owns 30% of the Hughes tracking stock, wants at least $5 billion in cash out of any merger. Analysts say Ergen would need new, deep-pocketed equity partners to come up with that.
Industry and Wall Street execs believe Smith was squeezed out for his opposition to a sale. "The due diligence process has been excruciatingly slow, and it's Smith that's been holding it up," said one analyst. "Murdoch clearly has the upper hand now." News Corp. and EchoStar execs could not be reached for comment.